Milestone® Mastercard® review: A disappointing attempt to help people with bad credit

Building credit takes a lot of hard work. Whether you have no credit history or are rebuilding your credit score, many lenders may hesitate to offer you a credit card or personal loan.

The Milestone Mastercard is specifically built for people with bad credit. At first glance, it may look like a good option. It’s an unsecured credit card, so it won’t require a security deposit, making it helpful for people who would not have an easy time coming up with a minimum deposit (typically around $200).

Unfortunately, like many other credit cards for bad credit, the Milestone card comes with a low starting credit limit, high interest rates and varying annual fees. However, the Milestone Mastercard’s $300 starting credit limit is already pretty low, and its annual fee also cuts into that limit. Such a low limit can hurt your credit utilization ratio and make building credit harder. 

What’s more, the card terms and issuer webpage don’t mention any way to increase your credit limit — a necessity among competing cards. Several competitors also earn rewards, provide free credit score checks or may increase your credit limit within the first year. At the end of the day, many other cards on the market provide more value for no annual fee or a similar annual fee.

If you prequalify through the issuer’s website, you’ll actually be preapproved for one of three versions. Factors like your credit history and income determine which version you’re eligible for, but the only difference between the three variants is the annual fees. 

This review breaks down the Milestone Mastercard available through Bankrate and the issuer’s website, but there are potentially 23 total versions of the Milestone card available through different websites, mailed prequalifying offers and other ways you can apply. Thoroughly read through the terms before applying since this confusing process could stick you with a version of the card that charges additional maintenance fees, bafflingly high annual fees (such as $175 in the first year) and/or an extreme ongoing APR. It’s safe to say that people should avoid the Milestone Mastercard versions with these rates and fees at all costs.

Quick highlights

• Rewards rate: N/A
• Welcome offer: N/A
• Annual fee: $35 to $99
• Purchase intro APR: N/A
• Balance transfer intro APR: N/A
• Regular APR: 24.90 percent

Current welcome offer

Since the focus on the Milestone Mastercard is to build credit, the card doesn’t come with a sign-up bonus. That’s not unusual since most credit-building cards don’t carry welcome offer rewards. 

The Milestone Mastercard doesn’t earn rewards. However, several popular unsecured and secured credit cards do earn rewards and may bring more value to the table while you’re building credit than the Milestone card does.

It’s hard to recommend many unsecured rewards cards if you have a low credit score because several of these options have slippery terms with high rates and fees. But, if a security deposit isn’t a deal-breaker, many leading secured rewards cards don’t pose an annual fee at all, such as the:

• Discover it® Secured Credit Card
• Capital One Quicksilver Secured Cash Rewards Credit Card
• Bank of America® Customized Cash Rewards Secured Credit Card

Credit cards designed for limited credit generally carry barebones perks, but the Milestone Mastercard carries even fewer features than usual. This card doesn’t offer anything beyond its solid approval odds and industry standard account protection. 

In fact, the issuer’s website doesn’t mention any way to increase your credit limit or even check your credit score for free — two staple features the majority of credit cards offer (and are especially helpful for building credit).

Mastercard account protection

The Milestone Mastercard only offers standard Mastercard benefits. These basic features include basic zero liability fraud protection for unauthorized purchases and identity theft monitoring. Enrolling in the Mastercard ID Theft Protection service allows the issuer to regularly search the surface web and dark web for any of your personal information that may have been compromised (including your Social Security number, email addresses, bank and card info, account logins and more).

However, these “perks” can be found on almost any Mastercard, and are common to most credit cards in general.

Painless prequalification

The Milestone Mastercard has a quick prequalification process that uses a soft credit pull to look at your credit details. Prequalification doesn’t guarantee approval, but it does give you a strong indication of your chances of approval. This prescreening process makes it easier for you to shop for a credit card without having a hard credit pull impact your credit.

When you have bad credit, any type of fee is a distraction from building good credit habits, and the Milestone Mastercard’s annual fee can be pretty steep depending on which variant of the card you pre-qualify for: $35, $59 or $99 ($75 the first year if you qualify for the $99 fee).

The Milestone Mastercard has a high 24.90 percent variable APR and 29.90 percent cash advance APR as well. Missing your payment due date may also incur a $40 fee or late and returned payments. Avoiding cash advances and paying your balance on time and in full each month are good financial habits, and are all the more important given this card’s high rates and fees.

You’ll only face a $40 overlimit fee if you opt in to the issuer’s Overlimit Coverage, since transactions beyond your limit will be declined otherwise. Although it sounds like a positive, the Overlimit Coverage can pose up to two additional $40 fees on top of the original overlimit fee if you carry an over-extended balance to the next billing cycle. However, the coverage’s terms state you’ll only pay one fee per billing cycle. This is especially strange considering overlimit fees have largely gone extinct, and the occasional issuer that allows you to exceed your limit may not charge an overlimit fee to begin with.

On the bright side, the foreign transaction fee is pretty light at 1 percent (typically 3 percent). However, any foreign transactions could be declined unless you notify the issuer with a travel alert beforehand.

Before applying for the Milestone Mastercard, take a moment to consider your options. Odds are you’ll find a secured or unsecured option with stronger features and lower rates and fees to help you build credit.

The Milestone Mastercard and the Mission Lane Visa® Credit Card are both geared directly toward consumers with low credit scores and both carry standard features. There are, however, a few key differences that set the two cards apart.

Both cards carry an annual fee, but the Mission Lane Visa could offer a lower fee if your credit score is already on the rise: $0 up to $59, based on your credit profile. An annual fee is not ideal for any kind of credit-builder card, but the Mission Lane Visa is a bit more affordable if you’re set against secured cards.

Perhaps the most significant difference between the two cards is the ability to increase your credit limit with the Mission Lane Visa. Both cards have a low $300 starting credit limit, but Mission Lane could review your account for on-time payments and increase your credit limit within your first 12 months. The Milestone Mastercard’s terms don’t mention this key feature at all, which could make your credit-building journey a longer road. Based on this feature and the annual fee alone, the Mission Lane Visa is likely a better option.

If you’re trying to minimize costs as you rebuild your credit, you may need to turn to a secured credit card like the Capital One Platinum Secured Credit Card. On top of no annual fee and no foreign transaction fees, it comes with one of the lowest security deposits available. If you qualify, you could get a starting credit limit of $200 with a deposit as low as $49. Or you can deposit up to $1,000 if you prefer a higher credit limit. A $1,000 maximum credit limit is still quite restrictive, and is even low for a secured card considering $2,000 to $2,500 is typically the limit. However, this is still miles better than the Milestone Mastercard’s $300 limit.

Plus, Capital One may increase your credit line and refund your deposit in as little as six months if you pay on time and keep your account in good standing. This is one of the shortest automatic account reviews on the market if you’re looking to expedite your credit journey.

It’s probably not a good idea to pair any other cards with the Milestone credit card. If you’re in a position where you need this card, you should have one goal: building your credit. Rather than pairing cards with the Milestone credit card, you may want to consider upgrading to a better card altogether when you can or exploring alternative methods to building credit. Tools like Experian Boost and UltraFICO are a couple of options that use alternative methods for credit building and reporting.

You likely still won’t qualify for the best rewards cards right after graduating from a credit builder card like this one, but you can find cards for fair credit that offer rewards, more features and lower rates and fees.

For a card that is aimed more toward consumers with less-than-stellar credit scores or little credit history, the Milestone Mastercard limit, rates and fees make for a bad combination for people who are trying to get back on their feet. The high annual fees mixed with a low credit limit severely cuts into the initial available credit, and the price tag probably won’t justify the lack of any rewards or credit-building features. 

Make sure to consider other cards before you decide to apply for the Milestone Mastercard. There are stronger (and more rewarding) options for credit-building with lower rates and fewer fees — especially if you consider secured cards.