Top 5 Reasons Why Credit Card Tips Are a Bad Idea

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American’s eat out an average of 4-5 times per week. That includes running to get a quick bite for lunch, fast food stops and dining out at a sit down restaurant. Eating out is becoming more accommodating too, with gluten free, low-fat, and vegan menu options, among others. There’s been a lot of debate about tipping fairly and unfairly, and everyone has their own opinion about what is and isn’t acceptable when eating out. Facebook pages like this one have popped up advocating for servers right to get a tip among other similar pages.

This post isn’t about whether or not you should tip, it’s about tipping in cash. Why is it important to tip in cash? There are two main reasons; you can ensure your server gets to go home with that cash in hand and credit card fraud from dining out is one of the most common ways to have your identity compromised and your account information stolen. Here are the following reasons why you should tip in cash, instead of on your credit card.

  1. Tips are how servers make a living. Unless you are serving in another country, servers in the United States only make about $2.13 per hour and their income is tip-dependent. Pay day is irrelevant for servers because they are almost always voided out and if not, they are about $20, on a good pay day. Credit card tips also get taxed, so you make less than what you actually think you made that shift.
  2. Some restaurants allocate credit card tips into your pay check that you don’t see for another two weeks. Yes, that’s how most employees get paid, but serving is different; they expect to get paid per shift, not bi-monthly. 19379834_sMany times people choose to serve because they are bad at managing their money so getting paid per night allows them to budget more effectively for their lifestyle. If you serve at a restaurant that does business this way, and you received all credit card tips that night, you may walk home with nothing after a 7 hour shift. Imagine if you barely made it to work on E, and now you don’t have any money for gas to get home.
  3. Not everyone is honest. Some servers can and will adjust your tip, especially if they feel they deserved more or got stiffed altogether. That’s why it’s so important to check your credit card statements regularly so you can monitor that activity and catch it. This also applies to managers. Some have the ability to allocate some of that tip money into their own pocket without anyone knowing unless they look in the books at the numbers. This is more common where tips are placed into a pool for bussers, host staff and bartenders.
  4. Patrons also make mistakes (math isn’t my strong point either). Say your total was $54.98 and the tip line says $16.02, but the total line says $65.00. What do you think the server is going to pick; the $16.02 tip or the $10.02 tip? Sure that’s dishonest and irresponsible on the servers end, but it’s so tempting to them. Double check your math if you must tip by credit card.
  5. Restaurants are one the most high-risk places to have your identity and information stolen. Servers can make copies of your information and some restaurants even keep it on file, like those that allow on-line ordering. You are much better off keeping your credit card information from others’ eyes. If they must go to the back to run your card, try to keep an eye on it and make sure it’s not getting swiped twice or copied down.

Another good rule of thumb when tipping in cash is to write a “0” with a line through it where the tip line is or write “tip in cash” so the server knows why there was no tip left on the credit card receipt. It also alerts the server if someone stole their tip off their table, which happens frequently, usually from bussers or fellow jealous or desperate servers. Think you’ve already had your information compromised? Check out one of these identity theft programs for help. If you just want to be proactive, try signing up for one of these money management programs, many of which alert you to large or unwanted charges, among others.

Editorial Note: Any opinions, analyses, reviews or recommendations expressed in this article are those of the author’s alone, and have not been reviewed, approved or otherwise endorsed by any card issuer.

*The content in this article is accurate at the publishing date, and may be subject to changes per the card issuer.

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