PSA: Using A Gift Card At A Restaurant Is A Terrible Idea

On the outside, giving someone a chain restaurant gift card sounds like a pretty good gift idea. A free $50 meal at Red Lobster? Awesome! But if you've ever tried to use a gift card at a restaurant, you probably already know that the process can be a total hassle, and giving someone a gift card for a chain restaurant is just setting them up for disaster.

The problem with using gift cards at restaurants comes down to the way credit card machines are programmed to handle gratuity. Let's say there's $50 on the card. When you try to pay with a card at a restaurant (gift card or otherwise), a hold of 120 percent of the cost of the meal is usually added to the card automatically, to accommodate a later tip addition of up to 20 percent. After you pay and leave, your server goes back to the machine and updates the charge to incorporate the full cost of your meal, including tip. This method assures the restaurant that there's enough money in your account (or on your credit card) to pay for the meal as well as the tip.

While this system works just fine for credit cards, it's a real headache with gift cards. Let's say you have a $50 gift card, and budget out your meal so it costs $47. You hand the card to your server, planning on leaving a cash tip, but instead of deducting $47 from the card, it actually tries to deduct closer to $60, and your card is declined. You only have a couple options when this happens: You can either just pay for the meal out of pocket, or your server can run the card over and over again, each time charging slightly less, until it's no longer declined and you can make up the difference in cash. But because restaurants are charged every time they run their credit card terminal, they really don't want to be doing this for you.

The moral of the story? If you want to pay for a meal with a gift card make sure the amount you're charging is nowhere near the total value of the card, and if you want to give someone a chain restaurant gift card as a present, just write them a check instead.