(Nexstar) – If you’ve got a coin wallet handy, you might not need it for much longer. The US Treasury Department is reportedly getting ready to halt the production of new 1-cent coins by early next year. The Wall Street Journal noted that this change could affect how we pay for things.
This month, the Treasury issued a final order for penny blanks, meaning they will keep minting pennies until they run out of room for them. According to a spokesperson, the discontinuation of the penny could force businesses to round prices to the nearest five cents.
The Treasury and the US Mint, in charge of producing coins, didn’t immediately respond to requests for comments.
The report from Thursday mentions that, after the Department of Government Efficiency (DOGE) targeted the penny, former President Donald Trump urged the Treasury to stop minting new 1-cent coins, labeling them as unnecessary.
Right now, it costs about 3.69 cents to produce a single penny, according to the latest figures from the US Mint. This marks the 19th consecutive year in which the production costs for the penny and nickel have been greater than their face values.
Earlier this month, a bipartisan bill introduced by Senators Jeff Merkley (D-Ore.) and Mike Lee (R-Utah) aimed at stopping penny production gained attention. This is just one of several bills proposed since Trump’s remarks about the 1-cent coin. Merkley and Lee have not yet commented on the recent report.
Under the Constitution, Congress is tasked with regulating the Federal Reserve and overseeing monetary policy.
The US isn’t the first country to consider discontinuing such low-value coins. Canada did something similar in the early 2010s for reasons that echo the current discussions in the US. Interestingly, while it costs 1.6 cents to produce a penny in Canada, that was still deemed too costly for the government.
What happened when Canada dumped the penny?
Canada removed the penny from circulation not only for cost reasons but also to simplify transactions. The Royal Canadian Mint collaborated with financial institutions and charities to gather old pennies, effectively reversing the production process. The old pennies were melted down to recover their metal value, as explained by Alex Reeves, a senior manager at the Mint.
Without pennies, cash transactions would get rounded to the nearest nickel. For example, if your total is $19.82, you’d pay $19.80. If it’s $19.83, you’d pay $19.85. Payments made through checks or cards wouldn’t be affected.
It seems likely the US would follow a similar path, as suggested by a Treasury spokesperson in the Wall Street Journal.
Will pennies become valuable collector’s items?
Probably not, is the short answer.
Even a decade after Canada eliminated the penny, collectors noted that its value has not dramatically increased. Todd Sandham, who owns a coin and jewelry shop in Ontario, stated recently that someone bringing in a jar of pennies could expect to receive only about one-and-a-half cents for each penny.
Experts in Salt Lake City informed Nexstar’s KTVX that they don’t foresee a significant spike in the value of pennies anytime soon. One store clerk, Casey Hackford, remarked, “I don’t think we’ll see a day where pennies are particularly valuable in the next few years—maybe not even in my lifetime.”
Pennies will still exist in the currency system, though.
What are the consequences of ending penny production?
Apart from rounding cash transactions, stopping penny production could have several implications.
There’s a practical issue: while you might often be paying with cash, you’d want exact change. But without pennies, it becomes tricky. For a $20 purchase, giving change for a $19.87 bill could be complicated.
Additionally, folks who primarily use cash might bear the brunt of this change. Abolishing the penny could end up being inconvenient for those relying solely on coins.
A 2022 Federal Reserve report had already suggested that the agency could “reduce or terminate penny production.” This same document indicated that cutting penny production could save around $100 million annually.
And what about nickels?
While the US technically incurs losses on pennies, making nickels is an even worse deal. According to the US Mint, producing a nickel has surpassed its face value for nearly 20 years, with it costing around 14 cents to make a five-cent piece as of 2024.
On a brighter note, producing other coins—like dimes, quarters, and half dollars—remains less costly. For example, a dime costs less than six cents to produce, while a quarter costs about 15 cents, and a half dollar costs around 34 cents.
