Milestone Mastercard® - $700 Credit Limit review: Shocking fees steer credit builders toward better cards

The Milestone Mastercard works like a typical unsecured credit card. You can make purchases up to your credit limit and you must pay your balance off by the card’s due date to avoid interest. You won’t earn rewards with the card, so there’s not much to keep track of other than your balance and the cost of keeping the card in your wallet.

While this review breaks down this version of the Milestone Mastercard, 28 or more versions of the Milestone card exist through different websites, mailed prescreened offers and channels.

Thoroughly read the terms of the card you qualify for before moving forward with your application since this confusing process could stick you with a version of the card that charges exorbitant additional fees — up to $150 each year in monthly fees, annual fees ranging from $35 to $99 each year or up to $175 in the first year and $49 thereafter, and an extremely high ongoing APR (from 24.9 percent variable up to 35.9 percent variable). 

If you’re offered a version of the Milestone Mastercard with sky-high rates and fees, you should almost certainly avoid the card. You can find many alternative credit-building cards that charge no annual fees, carry lower APRs or offer rewards programs.

Applying for a credit card with a low credit score (or no credit score) can be challenging. A hard credit pull can temporarily lower your credit score and a security deposit could be costly. Since the Milestone Mastercard doesn’t require a deposit, it may be an appealing entry point for people with low scores who want to start building toward better credit or don’t have any other options.

Credit line: Impressive limit with no deposit required

One of the Milestone card’s only appealing features is its potentially high unsecured credit line. You could receive a $700 credit limit with no deposit required. That’s more than double the credit limit you’ll typically find on unsecured cards available to people with low credit scores. 

Access to a higher credit limit will could help maintain lower credit utilization, a key factor credit bureaus use when scoring credit. To get a credit limit this high on a secured card, you’d need to deposit $700. That’s a costly initial sum that you might not have on hand, and tying it up in a deposit means you can’t use it to build credit through responsible spending.

Depending on which version of the Milestone Mastercard you get, you may end up with an exceptionally high annual fee and interest rate while only having access to a small credit limit. These features are especially big downsides given the card doesn’t bring any notable credit-building perks or other benefits to the table. 

Rewards: No rewards program or welcome offer

The Milestone Mastercard doesn’t earn rewards, limiting its long-term value. Rewards aren’t typical on cards available to people with limited credit, and it’s hard to recommend most unsecured cards for bad credit because many carry high APRs and fees. But a few no-annual-fee secured cards offer terrific rewards programs, including: 

• Discover it® Secured Credit Card
• Capital One Quicksilver Secured Cash Rewards Credit Card (See Rates & Fees)
• Bank of America® Customized Cash Rewards Secured Credit Card

The card also doesn’t come with a sign-up bonus, though most cards for limited credit histories don’t carry welcome offers. However, it’s worth mentioning that the Discover it® Secured Credit Card and several student cards carry valuable welcome offers.

Perks: Limited features

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

In fact, the issuer’s website doesn’t cover how you can increase your credit limit or check your credit score for free — two incredibly helpful features the majority of credit cards offer and a necessity for credit-building cards.

The Milestone Mastercard only offers standard Mastercard benefits. These 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 personal information that may have been compromised (including your Social Security number, email addresses, bank and card info, account logins and more). However, you can find these perks on almost any Mastercard and most credit cards in general.

Rates and fees: Outrageous fees eat into low credit limit

When you have limited credit history, any type of fee hinders building good credit habits. The Milestone Mastercard’s fees are shockingly steep compared to rival cards. 

The version we are reviewing has a whopping $175 annual fee the first year, then $49 in subsequent years. Although the Milestone card’s annual fee drops after the first year, you’ll still be burdened with a steep fee (see terms) of $12.50 per month, adding another $150 in annual fees. So while you are getting a reduced annual fee, it’s essentially replaced by this exorbitant monthly fee.

The Milestone Mastercard also has one of the highest ongoing APRs on the market (which can be as high as 35.9 percent) and a $41 overlimit fee if you opt in to the issuer’s Overlimit Coverage (if you don't opt in, the issuer will decline transactions exceeding your credit limit). 

Although it sounds like a positive, the Overlimit Coverage can also pose up to two additional $41 fees on top of the original overlimit fee if you carry an over-extended balance to the next billing cycle. These terms are especially bad considering overlimit fees have largely disappeared and the occasional issuer that allows you to exceed your limit may not charge an overlimit fee at all.

On the bright side, the foreign transaction fee is lower than normal at 1 percent.

Staff experience: Here’s what our experts say

When he was first starting out with credit cards, Bankrate editor Steve Dashiell learned just how quickly interest charges and card fees can add up. While getting access to an unsecured credit line may seem like a lucky break, he says, it's not worth it if it means paying a ton of fees or facing a high APR. His advice on a card like the Milestone Gold? Skip it.

As someone who held a card similar to this in my younger years, here's my advice: Toss it. Unless you have a top-tier rewards card, you should avoid fees as much as possible. This card makes that impossible, and its fees can quickly add up, leading to a maxed-out card. That’s a bad place to be given the high APR.

In my own experience with this kind of card, I made the rookie mistake of paying only the minimum for the first few months. By my fifth month, I couldn’t keep up with the interest rate any longer and the account eventually went into collections. This won’t happen for every person who applies for something like the Milestone Mastercard. But with so many better, safer options on the market, why open yourself to the risks?

— Steve Dashiell, Editor, Credit Cards

Before applying for the Milestone Mastercard, consider your options. Odds are you’ll find a secured or unsecured option with stronger features and lower rates and fees that can better help you work on your credit score. Here are a few options worth reviewing.

High fees, no rewards and few notable features make the Milestone Mastercard a hard sell. Still, it may be worth considering this card if you’re set on avoiding a deposit and don’t plan to spend much. 

The Milestone Mastercard’s low credit limit, high interest rates and excessive fees make a bad combination for people trying to regain or establish financial footing. Its exorbitant annual and monthly fees (see terms) severely cut into the initial available credit, and the price tag makes it difficult for anyone to justify. 

Make sure to consider other cards before applying for the Milestone Mastercard. Stronger (and more rewarding) options exist to help build credit with lower rates and fewer fees.

Our proprietary card rating system takes into account a mix of factors when scoring credit cards for students and people building credit, including each card’s cost, APR, credit-building tools and more.

We analyzed over 50 of the most popular cards designed for students and people with no credit history, bad credit or a fair credit score and scored each based on where its key features stood in relation to others in its category. 

Here are some of the key factors that gave this card its score: