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Tip Tolerance & Gift Cards: What you need to know

I experienced a very odd scenario at a restaurant last night at dinner.  The final bill was $175.34.  I wanted to use a $100 Visa Gift Card and put the rest on my credit card, so I provided both cards in the check presenter (that’s the actual name for the large “wallet folder” the waiter / waitress gives you with your check inside).  However, only $83.33 was charged against the gift card instead of the whole $100.  The remaining $92.02 was charge to the credit card.  Why?  –> Tipping tolerance.

Below is an article written by Stephanie Zimmerman and originally published on ABC News (click here for the original).  It explains what tipping tolerance is and what you may need to look out for anytime you want to use a prepaid gift card at a place of business where tipping is involved (e.g. restaurant, bar, hotel, salon, etc.).

ORIGINAL ABC NEWS ARTICLE:

Dear ABC News Fixer: A couple weeks ago I bought my son and daughter-in-law a Visa gift card for their anniversary. It was a $50 card and I paid a $4.95 purchase fee. On the card holder jacket there was a notice that read: “No fees after purchase.”

My son and daughter-in-law used the card at a restaurant. When they paid their bill, they were told that the card was only worth $42. The server told them that Visa gift cards take about 20 percent off the top but had no other explanation.

My son no longer has the card – they left it at the restaurant, figuring it was completely used.

My question is: Where did that 20 percent go? The holidays are coming, and gift-giving is on people’s minds.

– Carol Humble, Glen Ellyn, Ill.

Dear Carol: Yikes. Between the purchase fee and the 20 percent, you spent $54.95 for this $42 gift.

A purchase fee of $4.95 would have been enough for the ABC News Fixer to scrap the gift card and buy something else.

As for the missing $8, we were mystified, until we heard about “tip tolerance.” This apparently happens when consumers use credit card-branded gift cards at businesses where gratuities are expected, such as a restaurant or a salon.

The business, understandably, wants to make sure the card has enough to allow for a tip. Many of these merchants use processing systems that will pre-authorize an extra 20 percent above the amount of the bill. That’s the tip tolerance. If there’s enough cash to pay the bill plus 20 percent, the transaction proceeds. Once the final amount is figured out – maybe the consumer only wanted to tip 15 percent, or maybe he or she decided to tip in cash – that exact amount of money is deducted from the card. If the preauthorized 20 percent tip wasn’t used, the money would eventually go back on the card when the transaction clears.

Your son and daughter-in-law’s dinner tab was about $160. We called Visa, and a spokesman said the restaurant should have been able to circumvent its normal processing system and just apply the full $50 gift card to the bill.

We are guessing the server first handled the gift card and entered in $42 plus 20 percent – not taking into account that they’d be using a second form of payment to pay the rest of the bill and the tip.

The extra $8 eventually would have gone back on the card after the transaction cleared. So it’s too bad they were told the card was used up, which is why they left it at the restaurant.

We’ve heard of other cases in which embarrassed diners had their credit card gift cards rejected because they were too close to the limit. In most cases, consumers can avoid this tip-tolerance rejection by telling the server ahead of time that they plan to tip in cash. For bigger transactions, it’s worth noting that some merchants won’t let you split a transaction between a gift card and a credit card. In that case, you’ll have to charge the whole thing and use the gift card for something else.

Consumers should be wary at gas stations, too, since some pumps automatically pre-authorize $50 to $75, even if you’re only planning to buy $25 in gas. Consumers with credit card-branded gift cards should go inside and have the cashier only authorize the exact amount they wish to pump.

Bottom line: Though they look like credit cards, these gift cards behave differently. To avoid an awkward situation, know your gift card balance and talk to an employee or manager before presenting it for payment.

>>Final Note:  I didn’t think to tell the waitress I would take care of the tip via cash or credit, which would have been the work-around to this problem.  Lesson learned.  I also noticed something else:  I walked out of the restaurant without my gift card because the waitress never gave it back to me (out of sight out of mind).  So even though the gift card receipt said “Avail Bal: $0.00,” there was clearly $16.67 left on it, which was the 20% tip tolerance ($83.33 * 0.20 = $16.67).  Assuming the waitress was “in the know” about how all this works, she walked away with her next dinner on me (or if not then it was probably thrown away) 😐

Here are my receipt images to match with this story…

Free Elite Status with Alaska Airlines for University of Washington Students!

Alaska Airlines is running a promotion targeted to students at the University of Washington, and it’s AWESOME! 😀

You’ll be able to obtain elite status (for free!) based on your GPA.  The qualification requirements are simple: 

Earn a 3.5 – 3.9 GPA and get 2018 MVP® status

Earn a 4.0 to get MVP® Gold

You will be notified in January when you’re ready to fly with your new status.

All you have to do is sign up or register below with your University of Washington email address, and better yet, Alaska will start you off with 5,000 bonus miles! ✈️

CLICK HERE to be taken to the registration page and register by Oct. 31, 2017.

Airline elite status is one of the best ways to travel smarter, providing perks like priority check-in, priority boarding, access to upgrades, free checked bags, and more.

Be sure to share this with any students you may know at UW!

Amex Platinum Cards: Metal Makeover

Both the Platinum Card and Business Platinum Card by American Express received a metal makeover earlier, and current cardholders are able to trade their plastic versions for the new metal ones.  You can make the switch either by calling the number on the rear of your card and asking for the metal replacement, or by logging into your online account and following these steps: (1) Click on Account Services, then (2) Order a Replacement Card for Damaged, Lost, or Stolen Cards, and (3) Request Metal Card.

Overall, there’s no additional value add with this update.  Rather, the cards simply looks better, have a nice feel to them, and will likely be more durable to last the full 4-5 years before they hit their expiration dates.

Anyone applying for the cards from a new application will receive the metal card by default.

As a final note, if you have a lower-tier card (i.e. Green or Gold Card, either personal or business) and want the Platinum Card, be sure to submit a new application if you want to get the signup bonus (highly advisable).  Simple calling in to upgrade to the Platinum Card will not allow you to receive the signup bonus (which is 60,000 points at the time of this writing and worth $600 at a minimum).

Pictured below: 1st image shows the plastic versions, 2nd image shows the new metal versions

ACT FAST: 1,000 Free Marriott Points!

You can receive 1,000 Marriott Rewards points for simply replying to their question on Twitter, “In what year was the @NFL founded?  Answer with #RewardsPoints by 8pm EDT on 9/24 and score 1,000 bonus points if you get it right.”  Hint: the answer is 1920.

In addition to this opportunity, there are a variety of other ways to earn points throughout the year.  If you participate in all of them, you will have amassed 45,000 points, which can be worth 1 free night at a top-of-the-line property or several free nights at mid to lower category properties.

Start here by linking your social media accounts (this is rewardable with points, too).  Then be sure to participate in the campaigns in the upcoming months to earn free points!

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