This is a guest post by Tisha Tolar.  Tisha is a freelance writer providing content for, where she regularly writes about credit cards, rewards programs and general consumer finance issues.

With the holiday shopping season on the horizon, malls, restaurants, and superstores will be a hub of bustling activity that will seem to never cease – at least until the husbands and boyfriends finally head home late on December 24th. During the busy days and nights of finding that all-important gift, we shoppers may tend to forget about those who help us out during the chaos. The waitress who brings us hot coffee refills, the taxi driver who unloads our bags of gifts, the street performer who brings a smile to our faces during a familiar Christmas carol. All of these people are working, much like us, to provide a good and happy holiday for themselves and their families.

Convenience of Credit

However, unlike many people who live paycheck to paycheck or even above the norm, many of the people helping us this season rely on cash tips to supplement their low-end pay. If you have never worked in an environment where tips are appreciated, you may have never before considered how our credit-toting selves have affected the tip-reliant. More people than ever depend on the convenience and safety of their credit card and as a result, have stopped carrying cash. With a credit card, a consumer receives buyer and fraud protection if stolen or misused. With cash, there is no such guarantee.

The Downside

Those who rely on cash tips have seen a drastic change in their income. What used to be a great convenience to workers to keep their tips each night is now a ball of paperwork. Employees who receive tips via credit cards no longer have access to the immediate cash they used to depend on. More Salvation Army Santa’s are being ignored because they don’t take Mastercard. A cashless society is a hard adjustment to many non-profit organizations and street artists, who find it harder to get donations.

The Upside

However, on the other side is the statistics that those diners who pay out tips on credit are more likely to be more generous and charities are reporting that since instituting online donation technology, they too have seen an increase in charitable donations. It is this technology that make living in a cash-free society but it is also this line of thinking that leaves many struggling in debt. Perhaps going back to the “old school ways” and carry some cash can give everyone a happier holiday and here’s why:

  • Cash purchases can certainly limit your spending and force you to stick to a budget.
  • Cash on hand makes it easer to track your spending and focus on what your really need.
  • Cash on hand eliminates interest charges.
  • Cash on hand allows you to tip the nice waiter who catered to you after a long day of shopping.
  • Cash on hand helps the bell-ringing Santa provide presents for those less-fortunate than you.

So, as you head out this holiday season, take time to plan a shopping budget and leave the credit cards at home. Keep a little extra cash on hand and perhaps you will get the chance to brighten someone else’s holiday, while keeping yourself out of holiday-induced debt.


  1. Les on December 11, 2008 at 12:03 pm

    I am wondering how tipping with a credit card will affect a server’s taxes (ie. they are forced to declare it and can’t hid it).

  2. 9 OH 2 on December 11, 2008 at 12:07 pm

    Hi Les,

    I think most servers take cash from their floats to compensate for credit card tips so it should really affect taxes. Obviously they are still ‘supposed’ to report this income but I doubt that it happens often…if at all.

  3. Les on December 11, 2008 at 12:27 pm

    I understand the point of the article but if I am paying the bill with credit then I will do the same with the tip. I don’t carry a lot of cash and even if I do I don’t have the right change. I get paid every 2 weeks, some people get paid weekly or monthly and I think getting paid on a regular schedule probably helps you budget better.

  4. Chuck on December 11, 2008 at 12:29 pm

    One of my friends used to work in his family’s restaurant and he used to only declare some of his tips. The CRA would be suspicious of a server who had no tip income.

  5. FrugalTrader on December 11, 2008 at 12:31 pm

    Another issue with tipping with a credit card is that some establishments subtract the credit card fee from the tip. For example, if you tipped $10, the restaurant may take 5% as the credit card fee for the tip. Not a lot, but it can add up over the months if a server is making $200 a night in tips.

  6. Daniel Morel on December 11, 2008 at 12:33 pm

    I know that in most restaurants servers pay taxes on all CC tips and it can be that if a very large amount of tips are earned in a given week the server will get a tax bill instead of a paycheck. I for one do not care if they pay their taxes or not but I do not carry cash, ever. If a server would ever suggest to me that he preferred a cash tip in order to avoid paying taxes I’ll make it easy for this person’s tax time and leave no tip.

  7. diner on December 11, 2008 at 2:00 pm

    speaking of tips, in canada is it required to give tips ? I know in the US its the law but in canada I havent seen anything that say you have to leave a tip ? Why should you be forced to leave a tip if the service was bad, food was cold and your cutleries dirty. But personally I still would leave 5% even for bad service, 10% for average and 15% for excellent service. Also I dont see the point why servers should get a tip just for doing their job. There are other jobs that are harder, requires more skills and have risks that get paid minimum wage but they dont get any tips.

  8. Bill on December 11, 2008 at 3:54 pm

    I usually carry very little cash on me so all my tips go on the Credit Card. I usually leave 15-20% depending how service was.

  9. TStrump on December 11, 2008 at 3:54 pm

    When I pay with my credit card, the tip also goes on the credit card.
    The simple fact is, getting some kind of tip, is better than NO tip.
    I’ve worked in the hospitality industry and found that I would spend the cash tips too quickly sometimes.
    If I had to wait to get my cc tips, it would be better, I think – kind of like forced savings.

  10. Les on December 11, 2008 at 4:12 pm

    If the service is bad and it is the server’s fault (and especially if they aren’t trying) then I see to reason to leave any tip. The whole tip system for me is to ensure/reward good service.

  11. Sampson on December 11, 2008 at 4:15 pm

    Is it law to tip in US? really? why wouldn’t they just build in a service charge like most other countries if it was mandatory?

    I almost always pay using CC, and tip with it also. It sucks if the restaurant takes the credit card fee out of there, but I’ve got no sympathy for those wanting cash so they can avoid taxes. No one else gets to dodge taxes, why should servers? Only if I received a discount would I pay cash.

  12. FrugalTrader on December 11, 2008 at 4:25 pm

    I was in south Florida a little while back and all the restaurants charged 15-18% automatically. I usually tip very well, but being “forced” to pay a higher percentage tip was a little disturbing.

  13. davidC on December 11, 2008 at 4:41 pm

    I usually leave a cash tip around 10-15% of the bill, but if I completely dislike the service and/or food I may not leave anything.

  14. Sarlock on December 11, 2008 at 5:13 pm

    I tip from 10%-20% usually, scaled on the level of service. I have left no tip on the rare ocassion, when the service was really poor.
    I carry some cash, but it’s in $20 bills, so leaving a cash tip isn’t feasible. Besides, I’d rather get the reward points for the $5 tip by putting it on my credit card…

  15. InstruMike on December 11, 2008 at 5:46 pm

    I still use cash for most of my purchases, I find that it keeps me on budget because I always know how much I’ve spent and how much I have left. If I buy a big ticket item, I will use a CC for the buyer protection.

    As far as tips, I always leave a tip usually in cash and it ALWAYS depends on service. Once I’ve left 2 pennies for incredibly bad and insulting service. I’ve also left better than 50% when the service is exceptional. What I hate is when a server expects a tip just for being a waiter/waitress or complains that the tip wasn’t 15%.

  16. Craig on December 11, 2008 at 5:54 pm

    I agree with Frugal Trader. I hate being forced to leave something. But if it was set already in the price like in Europe, I would be fine with it. I hate the awkward feeling of not sure if the gratuity included is it, or I need to tip after. I hate that at restaurants. Everything should just be like Europe where the gratuity is already built in on the price so you don’t have to worry at restaurants.

    For little things, I think you always need to carry some cash around. There’s so many unwritten rules and people who expect to get tips for doing nothing that its hard these days.

  17. Jim on December 11, 2008 at 6:38 pm

    There is NO law at all that requires tips in the USA. Tipping is very common in US culture and almost seems mandatory. But its just culture and its entirely optional.

    I pay with credit cards and tip on the card. I’ve never had a server complain. I get 3% cash back on restaurant bills. I see no compelling reason here to carry around extra cash to use for tips just cause it might marginally benefit the server somehow.

  18. Frog of Finance on December 11, 2008 at 6:43 pm

    If I pay for the meal with my credit card, the tip is on the CC also. I really dislike leaving cash money on the table where anyone could pocket it, not just the server.

  19. Kris on December 11, 2008 at 7:38 pm

    I read the receipt to see if the Gratuity was included or if I can pay it with the credit card. If I can’t leave it as part of the credit card payment, and I have no cash, well it can’t be helped. I haven’t run into such a case anywhere.

    If I’m the designated payer for the table, I’ll wait for everyone to decide on the tip for the entire table, and then pay the meal with the credit card and leave the tip in cash.

    There are some places in the USA (eg Alaska), where the expected gratuity is assumed in the server’s income, so they get taxed on it weather you leave one or not. So if you don’t leave a gratuity there, the server loses money. (Incentive for good service, or disincentive to work for restaurants?)

    On large tables, where the tab is a few hundred dollars, most of the places I’ve eaten at, automatically include the gratuity. In which case sometimes additional amounts are left if it was exceptional service.

    It’s almost a disincentive to eat out anymore since restaurants are either raising the prices or making the portions smaller. If I can prepare the same thing at home for 1/4 of the price, may as well do that if the cost of the food and imaginary cost of my time makes if worth it.

  20. Scott on December 11, 2008 at 10:44 pm

    US: I think tips in the service/food industry are “mandatory” because the servers make absolute cr@p wage (maybe lower than min. wage?). This compensates their earnings somewhat. And, because the profit margin in the restaurant industry is so tight/small, prices would have to rise in order to pay the staff more. Would you rather “tip” your waitress 18% automatically, or pay 25% more for your burger AND leave a tip on top of that? I’ve also heard that the service in the US is much superior to that of Canada because the workers rely on tip money so much so they bust their butts.

    CAN: It’s not law. This relates to the earlier posting on ‘Quality’. If the service is quality, then I will tip accordingly. Tip is for service only, I’m already paying for the food so if the food is cold/bad I will complain and deal with it that way.

    It’s a pretty good challenge to find really excellent service these days — service you would be willing to pay 15-20% extra for — in any field. Also interesting that tipping has become so ingrained as part of cash-based occupations and not other types of occupations. I had some work done on my house this year and the contractor went FAR above and beyond the norm (municipal issues). There’s no way I’m going to tip him 20% on his invoice but I will definitely get him some kind of material good/tip/thank-you.

    The thing that REALLY bugs me is the sense of entitlement some service industry workers have about being tipped — mainly coffee shops. Why? Getting me a coffee is your J-O-B! That is what you get paid a WAGE to do! No one throws me a Loonie just for getting to work on time every day — that’s just part of my job!

    The ‘Penny Tip’: I think the original intent behind leaving just one penny means you think the service was excellent (don’t ask me why). Of course that sentiment is totally lost in today’s $$$ world. Or I could be completely off my rocker.

    At least we aren’t Zimbabwe where they are printing up brand new $200 Million notes (that’s not a joke — their inflation rate is 230 Million percent — seriously). A loaf of bread costs $35 Million. That’s no joke either. Imagine trying to figure out a tip on a dinner for two, and carrying around the 17 pounds of cash to leave on the table! Even worse, the poor waiter at the end of the night who has to carry all his tips home! Bet he wouldn’t mind a couple of them shiny pennies.

  21. Rocket Spanish on December 11, 2008 at 11:33 pm

    Yeah not carrying cash would really affect the amount of tips people like these get. But it would force them to declare their real earnings to the cra

  22. slickster on December 14, 2008 at 10:28 am

    I think what Kris mentionned on the matter of gratuity being assumed (in Alaska) is really interesting. At first i thought that it was pure craziness but it actually forces the waiters to serve customers well. The whole point of a tip is to get good service and not customers simply giving to charity cases!?! Everyone needs to make a living (agreed!) but no one ever gave me money or encouragement for doing a bad job. I may not have ever worked in the hospitality industry but I would think good service = good tip and bad service = no tip.

    I don’t think Kris’ mention of it being a disincentive to work in a restaurant is true just because the potential to make good money is still there. Besides, if you’re desperate, you’ll take any job!

  23. Rob on December 15, 2008 at 1:25 pm

    I’ve seen all ends of the tipping spectrum, from 50c tip no matter what the size of the bill (Philippines) to 15% automatically added to the bill, with an extra line for another tip to confuse the drunken tourists (Bermuda). I fail to see the point of the article’s author – pay your tips in cash? I have no intention of doing so – not only does it force me to carry more cash, but if tipping on a card forces more income tax compliance, I’m all for it. I have to declare all my income – why should a server get off easy?

  24. 9 OH 2 on December 15, 2008 at 1:34 pm

    Hi Rob,

    This is why servers get off easy.

    As of March 31, 2008, the minimum wages are the following:

    * General Workers Minimum Wage – $8.75 per hour

    * Liquor Server Minimum Wage – $7.60 per hour (note: applies to employees serving liquor directly to customers in licensed premises as a regular part of their work);

    Student Minimum Wage – $8.20 per hour (note: applies to students under age 18, if more than 28 hours a week are worked during the school year, the General Minimum Wage applies to all hours worked in that week);

    * Homeworkers Minimum Wage – $9.63 per hour or 110 per cent of the general minimum wage (note: this wage applies to all homeworkers whether they are full-time or part-time, or students under 18 years of age);

    * Hunting and Fishing Guides are paid for blocks of time, not by the hour. They get a minimum amount for working less than five consecutive hours in a day, and a different minimum amount for working five hours or more in a day-whether or not the hours are consecutive. For working less than five consecutive hours in a day: $43.75. For working five hours or more in a day: $87.50.

  25. Mark on January 1, 2009 at 7:09 pm

    Interesting. I never thought about that.

  26. michael on July 24, 2009 at 11:23 am

    A server only gets paid 2.15/ hr. min wage does not apply to them because of tips. i always leave 20 percent to 30. plus a server does not keep all there tips, so by stiffing the server, you are stiffing the bartender, foodrunner, and assistants. a sever only get a little over half of his tips. if you dont have enough to tip right, you dont have enough to eat. if you only leave 10 percent, the server makes nothing from that because he still has to tip others out based on food sales and liqour.

  27. DAvid on July 24, 2009 at 12:25 pm

    “There are some places in the USA (eg Alaska), where the expected gratuity is assumed in the server’s income, so they get taxed on it weather you leave one or not. So if you don’t leave a gratuity there, the server loses money. (Incentive for good service, or disincentive to work for restaurants?)”

    There is no state income tax in Alaska. More likely the expected gratuity has to be distributed to the rest of the staff, and possibly the owner? Restaurant food appears real cheap when the owner has to pay virtually no wages!


  28. DannyS on February 5, 2010 at 7:27 pm

    Yeah i always do , even if i don’t personally know the person i feel that in these trying times its always good to support those that are trying to get by. Its never good to be too stingy but you always have to look out for your own pocket as well . You have to keep a balance .

  29. Anthony on July 18, 2010 at 2:42 pm

    I always use credit.

  30. Moti on February 8, 2013 at 1:05 pm

    I always tip and almost always will tip cash (dont trust their managers to split the tip properly) . I keep my ‘coin bag’ in my backpack or car, and it usually has 6-10 dollars in it which is always handy for the job. otherwise a $5 cash bill does fine.

    My wife worked in retail and at second cup (the nicer retail job) and either way tips are always appreciated. You have to be on the other side of the equation to understand it is not about the money but the recognition of service.

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