Should You Tip in Cash or on a Credit Card?

Most servers would say that cash is king, but there are consequences.

Restaurant check and a $100 bill
Photo: Sergey Yarochkin / Adobe Stock

Ask a group of servers whether they prefer their tip in cash or on a credit card, and you'll get thousands of different answers. No, seriously, I asked this question of my nearly one million Facebook followers and quickly received over 3300 responses. The topic of tipping is hotter than a cast iron fajita skillet that's been sitting under a heat lamp for two hours. Everyone from servers to bussers to hosts, has a very strong opinion on tipping: cash is king.

Leaving a tip in a restaurant is much more complicated than most customers realize. While it might seem that one simply leaves some extra cash on the table or scribbles an additional dollar amount on a credit card receipt that will go to the person who served their food, that's only the beginning of the journey for that gratuity. Like Alice in Wonderland, that ten-dollar tip falls into a rabbit hole and grows and shrinks depending on the restaurant's policy. It can get divided up and proportioned out to other restaurant workers who worked that same shift. On the other hand, leaving a credit card tip might mean the server won't actually see it until two weeks later when it ends up on their paycheck. On top of that, some restaurants make the server pay the credit card processing fee for the amount of their tip. That means if they get a $20 tip, they might end up paying a couple of percentage points on that tip right back to the restaurant.

So, what's the best way for a conscientious customer to leave a gratuity? Most servers agree it's more important that you leave a tip than how you leave a tip. "I don't care as long as I'm tipped appropriately for the service I have given," says server Brandy.

Andrea, a bartender, concurs. "I prefer cash tips, but I appreciate any tip regardless of the form."

When you go into a restaurant, you'll have no idea what's going to happen to the tip you leave. Asking your waiter about the restaurant's tipping policy is as awkward as telling them about your irritable bowel syndrome. Some things are just better left unsaid. If you choose to tip the host or maitre d', your only option is probably cash unless you want to ask them for their Venmo handle and that's even more uncomfortable than discussing IBS. The same thing goes for tipping the extra-friendly busboy or the person who ran food to your table and then got you more lemons and napkins too. You can assume that some of the tip you leave for your server is going to end up going to them. (Remember what I said about your tip falling into a rabbit hole?)

If you want to pretty much guarantee that you're making your server as happy as they hopefully made you, stop at the ATM on your way to the restaurant and get some cash. However, knowing that some people see paper money as antiquated as a boeuf Bourguignon and Watergate salad, rest assured that there are real benefits for leaving the tip on a credit card whether the server likes it or not.

When you get ready to collect Social Security, your tips do not count as income if you do not claim them.

In a recent scientific poll of extreme and delicate accuracy (on Twitter), only 12% of servers said they claim all of their cash tips. 35% of them don't claim any of their cash tips, and 52% only claim a portion of them. This might seem like a good idea to the newbie server who hasn't yet had their fingerprints seared off by hot plates, but more mature servers know the deal. "Remember," says long-time waitress Terri, "When you get ready to collect Social Security, your tips do not count as income if you do not claim them."

Another "lifer" agrees. "We turn all of our cash in and we are paid weekly. I prefer it this way because we have a verifiable income when we buy a car or a home," says Jennifer.

Not claiming cash tips might help a waiter out in the short-term when it comes to paying taxes, but plenty of restaurant workers learned the hard way how damaging this practice can be. When restaurants were forced to close down last year due to COVID-19 and waiters and waitresses began filing for unemployment, some saw their weekly benefit was decidedly lower than it should have been since they had not claimed all of the cash tips they had been making. If you leave the tip on a credit card, you might be doing your server a financial favor for their future. Besides that, cash tips seem to spend a lot easier than those that end up on a paycheck. After a long shift at the restaurant, some food service workers might find themselves at the very bar they were just tending, only to turn those cash tips right back into the restaurant for beers and cocktails.

I prefer being tipped the appropriate amount only. I don't care one bit about the form in which it arrives.

The bottom line is that when you go out to a restaurant and want to leave a tip, do what's right for you. Your server might prefer a cash tip, but that same server probably also wishes that kids weren't messy, managers always had their backs, and that dirty aprons washed themselves. We don't always get what we want. Cash may be the preference for most, but waitress and bartender Jessica says it best. "I prefer being tipped the appropriate amount only. I don't care one bit about the form in which it arrives."

The one thing that all restaurant workers can agree on about tipping is that it 100%, absolutely needs to happen no matter how you decide to do it. But, c'mon—cash is king.

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