Penny Shortage in the U.S.
Pennies are becoming increasingly hard to come by in the United States.
Earlier this year, President Donald Trump’s decision to halt penny production started affecting businesses nationwide. Many merchants are facing a shortage of coins, making it difficult to provide exact change. Banks, on the other hand, can’t order new pennies and are limited to distributing what little they have left to customers.
For instance, one convenience store chain, Sheetz Co., got so desperate for pennies that it briefly ran a promotion where customers could get a free soda for bringing in 100 pennies. Another retailer mentioned potential losses amounting to millions due to penny shortages as they had to make adjustments to avoid legal repercussions.
Dylan Chong, senior director of government relations at the National Retail Federation, commented, “This is a big change.”
The penny issue started worsening last summer and seems to be heading for a peak as the holiday season approaches.
Now, it’s worth noting that no retailer or bank is asking for pennies to continue operations. They’re often viewed as cumbersome, mostly used for giving change. The abrupt decision to phase out the penny caught many stores off guard, leaving them asking customers to use spare change instead.
Jeff Leonard from the National Association of Convenience Stores stated, “We’ve been advocating for the elimination of the penny for 30 years, but this isn’t the route we intended.”
On February 9, President Trump announced that the U.S. would stop minting pennies due to their high production costs. Despite cost-saving measures at the U.S. Mint, it turns out both pennies and nickels cost more to produce than their face value. According to the latest annual report, it costs 3.7 cents to make a penny and 13.8 cents for a nickel in 2024.
On Truth Social, President Trump expressed, “Let’s eliminate waste from our great nation’s budget, one penny at a time.”
In May, the Treasury Department placed its final order for the raw materials needed to produce pennies. The last penny was minted in June and distributed to banks by August.
Troy Richards, president and COO of Guaranty Bank & Trust in Louisiana, mentioned he’s been struggling to maintain a supply of pennies since August. He noted, “We received an email from the Federal Reserve about reduced penny shipments, not realizing that those shipments had already stopped.” His bank lost $1,800 in pennies within a two-week span, with only a small amount left for customers cashing checks.
In the last year of penny production, the U.S. Mint minted over 3.23 billion pennies—more than double the production of quarters, the second most minted coin. The challenge is that pennies are typically dispersed as change and rarely make it back into circulation, as Americans tend to hoard them or use them for decor. Hence, the Mint has to produce large quantities annually.
The government expects to save $56 million by ceasing penny production. Even while losing money on each penny minted, the Mint generates profits through other circulating coins and commemorative sets aimed at collectors, earning $182 million in 2024 alone.
Aside from Americans hoarding pennies, logistical problems are complicating penny distribution. The Federal Reserve oversees coin distribution, but around one-third of the 170 coin terminals where banks can deposit and withdraw coins are currently closed for penny transactions.
Bank lobbyists note that this terminal closure intensifies the shortage, preventing regions with excess pennies from sending them to areas in need. A spokesperson from the Federal Reserve mentioned, “As a result of the U.S. Treasury’s decision to end penny production, the locations for penny circulation will shift over time as inventories run low.”
The penny shortage has also complicated legal matters for various retailers. In certain states, it’s actually against the law to round transaction totals to the nearest nickel or dime. Such actions might violate laws intended to keep cash customers on equal footing with debit and credit card users.
This has led retailers to limit their operations to avoid legal challenges. While a few cents may not seem significant individually, it adds up across many transactions. A representative from KwikTrip, a convenience store chain in the Midwest, stated they round all cash transactions to the nearest nickel, anticipating a loss of around $3 million this year. Some stores are also encouraging customers to donate change to local charities instead of dealing with pennies.
Currently, there’s a bill in Congress known as the Common Cents Act, which aims to require rounding cash transactions to the nearest nickel. While this could benefit businesses, it might impose additional costs on consumers.
The Treasury Department hasn’t clarified whether it provides any guidance for dealing with the penny shortage. The U.S. isn’t the only country moving away from small denomination coins, but typically those countries have phased them out gradually over several years.
For example, Canada decided to eliminate the penny in 2012, transitioned away from it in cash transactions by 2013, and is still in the process of redeeming and recycling these coins about a decade later. The British transitioned their currency during the 1960s and early 1970s.
In contrast, the U.S. abruptly removed pennies from circulation without any Congressional action or regulatory direction for banks, retailers, or states. The retail and banking sectors usually don’t collaborate closely with Washington on point-of-sale policies, but now they’re urging for clarity or new legislation to address the issues brought on by the shortage.
Leonard from NACS remarked, “We’re not looking for a penny back; we just need some clarity from the federal government because this situation is destined to worsen.”
