Get ready to stash those coins: The US might be looking to phase out the penny. According to reports, the US Treasury Department plans to halt the circulation of new 1-cent coins by early next year. This could change how we handle everyday transactions.
This month, the Treasury finalized an order for Penny Blanks, which suggests they’ll keep producing pennies until supplies run out. As a result, businesses will likely have to adjust prices to the nearest nickel, as noted by a spokesperson.
While the Treasury oversees the production of US coins, they haven’t responded to inquiries from Nexstar. This development comes after the Department of Efficiency focused on the penny and a prior call from President Trump for a new cent coin, labeling the current one as “waste.”
It’s interesting that it costs about 3.69 cents to produce a penny, based on the latest figures from the US Mint. Last year, the production costs for both pennies and nickels marked the 19th year in a row where their costs exceeded their face value.
Earlier this month, a bipartisan bill aimed at ending penny production was introduced by Senators Jeff Merkley (D-Ore.) and Mike Lee (R-Utah). This legislation is one of several that have emerged following Trump’s remarks about the 1-cent coin.
Lee expressed his satisfaction with the Treasury’s move, stating that each penny costs about 4 cents to produce, suggesting that halting this could save taxpayers over $85 million annually. Merkley added that while it’s sensible to stop minting pennies, it should be done thoughtfully.
According to the Constitution, Congress holds the authority to regulate the Federal Reserve and oversee currency matters.
The US isn’t alone in moving away from low-value coins. Countries like Canada have also abandoned their pennies for similar economic reasons, which began in the early 2010s.
What happened when Canada stopped circulating pennies?
Canada ditched its penny back in the early 2010s for financial reasons as well. At that time, it cost about 1.6 cents to produce each penny, significantly less than what the US is currently spending, but enough to justify their elimination.
The Royal Canadian Mint collaborated with banks and charities to gather existing pennies, planning to essentially reverse circulation, explained Alex Reeves, a senior manager at the Mint, during a PBS interview in 2014. Old pennies were melted down for their metal content.
Without pennies, transactions had to adapt. Cash purchases were rounded to the nearest nickel—for instance, a total of $19.82 would become $19.80, while $19.83 would become $19.85. However, checks and card payments wouldn’t face such rounding.
The US might implement a similar rounding system, as a Treasury spokesperson mentioned to the Wall Street Journal.
Will pennies become collectors’ items?
Probably not, at least in the near future.
A decade after Canada ceased penny production, collectors have noted that its novelty value hasn’t really increased. Todd Sandham, who runs a Coin and Jewelry Shop in Ontario, remarked that even if you bring in a jar of pennies to sell, you might only get about a penny and a half for them.
Experts from Coin Everything in Salt Lake City shared with Nexstar that they don’t anticipate any noticeable jump in the value of Lincoln pennies. “I can’t see a day coming where these coins are particularly valuable within our lifetimes,” explained store clerk Casey Hackford Pier.
Even so, pennies will still remain in circulation for now.
What are the implications of ending penny production?
Apart from rounded cash transactions, there could be further impacts stemming from the elimination of pennies.
One practical concern includes the challenge of making change—if you’re paying with cash and, say, buy something for $19.87, getting exact change back becomes trickier without pennies.
This change could particularly affect those who primarily use cash instead of credit or debit cards, particularly impacting low-income individuals who may rely on coins.
A 2022 report from the Federal Reserve indicated that ending penny production could be on the table, but it also highlighted a potential annual savings of about $100 million by reducing penny minting.
What about nickels?
The situation with nickels is even less favorable for the US. Nickel production costs have also been exceeding their face value for nearly two decades. In 2024, it might cost around 14 cents to mint a nickel.
On the other hand, other coins like dimes and quarters have better production cost ratios. According to the most recent US Mint data, it costs less than six cents to create a dime and about 15 cents for a quarter, while the cost for a half dollar is around 34 cents.
