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Overlimit fee on your credit card

  • Updated

All Neo Credit cards, including the Hudson's Bay Mastercard®—powered by Neo (except for cardholders residing in Quebec)—will have a $29 overlimit fee. Effective October 16, 2023.

A $29 overlimit fee is charged (except for cardholders residing in Quebec) when you go over your credit limit at any time during the billing cycle. If you have a Neo Credit card or a Hudson’s Bay Mastercard®—powered by Neo—then you’re subject to an overlimit fee.

You’ll be charged the overlimit fee immediately after the transaction that caused you to exceed your credit limit is posted. You can customize your notifications to keep up with your credit account activity at all times. So, you can take steps in advance to avoid an overlimit being charged to your credit card.

Let’s find out more about why an overlimit fee is charged and how you can avoid incurring it.

All about the overlimit fee

Let’s find out how an overlimit fee works

Your credit card has a $29 overlimit fee. If you make a transaction that puts you over your credit limit, then you may be subject to an overlimit fee (except for cardholders residing in Quebec).

If the transaction gets posted that causes your balance to exceed the credit limit, then an overlimit fee will be charged.

Let’s put the overlimit fee into action

Arbor has a $1,000 credit limit on his Neo Credit card and is carrying a balance of $950. He goes to the grocery store and fills his shopping cart with $100 worth of groceries. He charges the shopping cart to his credit card, which brings his credit card balance to $1,050. This puts him over his credit limit. Consequently, Arbor will only be charged an overlimit fee if he doesn’t pay back enough to lower his balance below the credit limit before his grocery store transaction gets posted.

Avoid an overlimit fee

Checklist to avoid an overlimit fee

Here are a few strategies to keep from being charged a $29 overlimit fee:

  • Pay down your balance before it reaches your credit limit.
  • Regularly monitor your transactions and view statements to keep track of your credit usage in the Neo app.
  • Set up Auto-Pay to never miss a credit card payment.
  • Make an instant payment so that your balance is below the credit limit after you go over your credit limit before the transaction is posted.

Make an instant payment to avoid an overlimit fee

Let’s take a look at Arbor's case (see above) and see how he can avoid an overlimit fee.

After charging $100 worth of groceries to his Neo Credit card, his balance was $50 above his credit limit. Now, he must pay back an amount that lowers his balance below the credit limit before the grocery store transaction posts to avoid an overlimit fee.

You need to act swiftly to avoid incurring an overlimit fee. Payments made from your Money account go through instantly. However, payments made from an external bank account can take up to 3 business days to be processed.

Pending transactions usually take 1 to 3 business days to get posted. To learn more, here’s an article on pending transactions.

Going overlimit can shrink your credit score

The credit utilization ratio is one of the factors that make up your credit score. If you exceed your credit limit or hold a large balance on your credit card, then your credit score will be negatively affected. It also indicates to a lender that you’re not using the credit in a responsible manner.

Your credit score shows a lender your credit worthiness. Here’s an article on the importance of your credit score.

Stay clear of overlimit

It's crucial to always spend within your means, even if you have a credit card with a higher credit limit. Using your credit card responsibly is a good habit, and it helps you build your credit score. Also, you may qualify for better rates on car insurance, credit cards, and you get approved for higher credit limits and more.

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