Introduction
Within the expansive realm of credit cards designed for those seeking to establish or improve credit, numerous options present themselves, each boasting distinct features and potential drawbacks. This article takes a closer look at the Milestone® Mastercard®, shedding light on its advantages, disadvantages, and points to consider. As we navigate through its characteristics, the aim is to offer a thorough overview, aiding individuals in making well-informed choices as they contemplate the selection of a credit card that aligns with their credit journey and retirement budget.
Understanding the Basic Features:
Credit Card Type
The Milestone® Mastercard® falls into the cards designed for individuals with bad or fair credit. These cards play a crucial role in helping users establish or improve their credit scores.
Annual Fee
The annual fee associated with the Milestone® Mastercard® is determined based on the applicant’s credit profile. As of December 2023, the annual fee can reach a maximum of $175 in the first year and subsequently reduce to $49 in the following years.
Monthly Fee:
A noteworthy aspect is the imposition of a monthly fee, with an upper limit of $12.50 monthly. However, users may benefit from a fee waiver during the first year.
Sign-Up Bonus:
Unlike some credit cards that offer sign-up bonuses, the Milestone® Mastercard® does not provide any initial rewards for new applicants.
Rewards:
The card in question does not offer any rewards program, emphasizing its primary purpose as a tool for credit-building rather than a rewards-earning mechanism.
APR:
As of December 2023, the Annual Percentage Rate (APR) for the Milestone® Mastercard® can be as high as 35.9%, signifying a relatively elevated interest rate. Users must be mindful of this when considering carrying a balance.
Foreign Transaction Fee:
For those engaged in international transactions, the Milestone® Mastercard® incurs a foreign transaction fee of 1%, a standard feature among various credit cards.
Benefits and Perks:
- No Security Deposit Requirement:
Unlike certain credit cards for bad credit that necessitate a security deposit, the Milestone® Mastercard® is an unsecured product, eliminating the need for an upfront deposit. This feature facilitates accessibility for individuals who may find a security deposit financially challenging.
- Credit Bureau Reporting:
The Milestone® Mastercard® reports to all three major credit bureaus – Equifax, TransUnion, and Experian. This reporting ensures that responsible credit behavior, such as on-time payments, contributes positively to the user’s credit history.
- Refundable Annual Fee:
Users can receive a refund for the annual fee when closing the account. While cancelling a credit card may have specific implications on credit scores, the flexibility to recoup the annual fee adds a layer of adaptability.
Drawbacks and Considerations:
- Accumulative Fees:
One of the primary drawbacks of the Milestone® Mastercard® is the accumulation of fees. Users may incur an annual fee, a monthly fee (post the first year), and a potential overlimit fee if spending surpasses the credit limit. The cumulative impact of these fees can significantly contribute to the overall cost of holding the card.
- High APR:
A notable disadvantage is the remarkably high APR of 35.9%, which can lead to substantial interest charges, especially for users carrying a balance. It emphasizes the importance of responsible credit card use and timely payments to avoid accruing significant interest.
- Small Credit Limit:
The maximum credit limit offered by the Milestone® Mastercard® is $700. While it serves the purpose for some users, others may find it limiting, especially considering the immediate impact of the annual fee on the available credit. Maintaining a lower credit utilization ratio, a crucial factor in credit scoring becomes challenging with a constrained credit limit.
How to Decide if it’s Right for You:
Assessing the suitability of the Milestone® Mastercard® involves careful consideration of individual financial circumstances and credit goals. Some key factors to contemplate include:
- Cost Evaluation:
- Calculate the total cost of ownership, factoring in annual fees, potential monthly payments, and any other charges associated with the card.
- Compare these costs with alternative credit card options available in the market.
- Interest Rate Awareness:
- Acknowledge the high APR and assess whether the card aligns with your financial habits.
- Endeavor to pay the balance in full each month to mitigate the impact of the interest rate.
- Credit Limit Adequacy:
- Evaluate whether the $700 credit limit meets your spending needs and allows for effective credit utilization management.
- Consider alternatives offering higher credit limits, such as secured credit cards with refundable deposits.
- Credit Building Strategy:
- If the primary goal is credit building, weigh the advantages of no security deposit against the accumulated fees.
- Explore credit cards with more favorable terms, even if a security deposit is required.
Conclusion:
Making an informed decision is paramount in credit cards tailored for building or rebuilding credit. While this article provides a comprehensive overview of the Milestone® Mastercard®, individuals must conduct thorough research, compare alternatives, and align their choice with their unique financial circumstances. Building credit requires a strategic approach, and selecting a credit card that complements one’s goals is crucial to financial stability.