The Hidden Costs of Credit Card Tips

By Bill Hardekopf for LowCards.com.

NEW YORK (TheStreet) -- Many of us don't think twice when we pay for dinner with a credit or debit card and add a couple dollars on the tip line. But what happens to that tip, especially when customers pay with a credit or debit card? How much of the tip does the waiter or waitress actually get?

Before looking at paying by card, it's worth appreciating how tipping affects your servers.

Waiters and waitresses make less than minimum wage because tips are supposed to more than make up the difference. In some states, waiters and waitresses earn half of the minimum wage. According to a 2008 study by the Bureau of Labor Statistics, the median hourly wage (including tips) for waiters and waitresses was $8.01.

Tipping policies vary by restaurant, with not all restaurants passing on the total tip amount to a waiter or waitress. You may be surprised at how many employees get a portion of your tip.

In some restaurants, servers place all of their tips into a tip pool that is distributed among qualifying workers, including employees who don't usually get tips directly from customers.

Restaurants may also use a distribution formula that gives a percentage of the tip to the hostess, bartender and others involved in the dining experience.

At other restaurants, servers distribute tips to others based on net sales. For example, 1% of total net sales could go to the hostess, 1% to the bartender, 1% to the food runner and 0.5% to the busboy.