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How does tipping on a credit card work?

When you tip with a credit card, you write the amount you wish to tip on your receipt, then sign the receipt to confirm the total amount (tip + bill) to be charged to your card. Unlike cash tips, credit card tips are processed and paid out to the service provider at a later date. For this reason, there are situations in which cash tips may make more sense-even though tipping with a credit card remains a convenient choice.

How to tip with a credit card in a restaurant

Tipping with a credit card in a restaurant usually follows a simple process:

  1. Ask for the bill. Look over your final bill and confirm it reflects what you ordered.
  2. Look to the pre-tax amount of your bill for tipping guidance. For a restaurant meal, the generally recognized amount to tip is 15% to 20% of the pre-tax bill in the United States.
  3. Calculate how much you wish to pay in tip, then write this amount on the "Tip" line of your receipt. Note that there are typically two copies of the receipt: one marked "Merchant Copy" and another marked "Customer Copy." You can write the tip on the "Customer Copy" for your records.
  4. Add the tip to the bill and write the total next to the line marked "Total," then sign your name. The total you enter cannot be charged to your card without your signature.
  5. Make a note of the total amount for your records. It's a good idea to check your credit card statements against your receipts to make sure you don't get charged incorrectly.

Tipping with a credit card vs. tipping with cash

Tipping on a card can make paying for services-such as a restaurant visit-more seamless. Tipping via cash can be better for service workers, however. Understand the key differences between card tips and cash tips so you're prepared for your next visit to a service business.

Advantages to tipping with a card

  • You may have more flexibility. If your tip total is greater than the amount of cash you have in your wallet, tipping fairly may require you to put the tip on a card.
  • You see the full purchase total on your card statement. Paying with a card consolidates your full expenditures into a single line item on your credit card statement. If you use your statements for budgeting or household money management, this may be preferable to paying tips separately.

Advantages to tipping with cash

  • Service workers get the tip immediately. In restaurants, cash tips typically get pooled, then taken home at the end a day (or a shift). Card tips, on the other hand, reach workers via the payroll process, which can delay receipt by a week or more.
  • The tip won't be chipped away by fees. Employers are legally allowed to subtract credit card processing fees from employee tips on a prorated basis. And some businesses like food delivery startups may charge fees to their workers depending on how they accept payment. Tipping via cash avoids these kinds of fees to ensure your server gets the most out of your tip.

However you opt to tip, you may want to ask if so-called "back-of-house" staff receive any share of customer tips and adjust your tip amount accordingly. At a restaurant, the back of house may include busboys, dishwashers, runners and others: all of the people behind the scenes who make your experience possible. It's common for these staffers to receive tips, but policies may vary.

How long does it take for a credit card tip to go through?

Most of the time, your total bill-the subtotal plus your tip amount-will be processed within one business day. It can take another day or two for the amount to change status from "Pending" to "Completed" within your credit card account.

Note that tipped workers don't receive your tips immediately if you pay with a card. Legally, they must receive their tips by the next pay period-but this can be a week or two after your card is charged by the merchant.

Tipping with a credit card: get all the facts

Tipping with a credit card has advantages, but some service professionals may prefer to receive their tips in cash. Learn the differences between tipping with a card and tipping with cash at restaurants and other service businesses-and don't be afraid to ask what kind of tip is preferred.