The 22-year-old defender was released by the Cherries in May after making 11 first-team appearances. He will come against his old-club playing for MK Dons in the Carabao Cup on Tuesday night.
"That was for Baily to find a new home and he has picked really wisely," Howe said of Cargill to the Daily Echo.
"You have seen loads of players who have gone on different journeys that have managed to fight their way back up.
"It might not have been that they were able to play in the Premier League in their early 20s but, come their mid and late 20s, they have the experience to do that.
"I am sure Baily will work his way back up. I think he has all the qualities to play at a higher level.
"Nothing would please me more to see Baily playing in the Premier League. I do think he has the technical qualities to play at that level."