Here’s a restaurant riddle for you:
Your teen takes a date to a restaurant. The bill comes for $40. Your teen’s prepaid card has a current balance of $47. Your teen hands the card and the bill to the waiter intending to pay a total of $46 with tip included. The waiter returns with the card and informs your teen that it has been declined. Embarrassment ensues.
Why was the card declined for insufficient funds? After all, there was clearly enough on the card to cover $46.
Stumped?
When your teen hands over the bill, the restaurant doesn’t know what the final tip will be. Naturally, they’d like to make sure your teen can leave a nice one. After all, their service was impeccable! So, the restaurant preauthorizes the purchase for the amount plus a generous anticipated tip.
Unfortunately, the restaurant’s anticipated tip (likely 20%) is more than your teen intends to leave. So, the restaurant’s anticipated total of $48 ends up exceeding the $47 on the card, and the preauthorization attempt fails.
The bottom line: teens need to be coached to leave a healthy tip cushion on their cards.
20% should be enough, but maybe 25% just to be safe. That way, the preauthorization with the restaurant’s aspirational tip will sail through, and the waiter will return with the bill sans the humiliation.
Then your teen can write the actual tip on the restaurant’s copy of the receipt. Later, when the restaurant finalizes or “settles” the bill, they’ll adjust the total transaction amount to reflect the actual tip amount. Your teen’s prepaid card balance will be restored accordingly.
Here’s an example of the proper sequence for a $40 restaurant bill charged to a prepaid card with a $50 balance. Watch how the balance adjusts at the end.
| Step | Card Balance |
|---|---|
| 1. The bill arrives showing the meal costs $40. | $50.00 |
| 2. Teen hands bill and card to waiter. | $50.00 |
| 3. Waiter preauthorizes card for $48.00, tacking on $8 (20%) to account for expected tip. | $2.00 |
| 4. Waiter returns bill and card to table. | $2.00 |
| 5. Teen writes in a tip amount of $6 (15%). | $2.00 |
| 6. Restaurant settles bill for adjusted amount of $46. | $4.00 |
So, spare your teens some embarrassment and maybe even some compensatory dish washing duties at the restaurant. Clue them in on the need to keep a safe tip cushion on their cards when dining out.
P.S. Running your prepaid card near empty can be a real problem at the gas station too, where you’ll often see a $75 preauthorization at the pump, even if you only intend to fill up for $20. Yet another reason to teach your teens to keep a hefty balance buffer on their prepaid cards.
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