Should we get rid of the penny?

By glblguy

pennies

A reader and friend of mine, Rob, pointed me to an excellent segment that was done by 60-minutes discussing the American penny. The segment asks the questions: How do you view the humble penny? A small part of bigger things? A useless drag on your pocket or purse?

According to 60-minutes:

  • It now costs the U.S. Mint almost two cents to make a penny and almost a dime to make a nickel.
  • Coins last about 30 years in circulation before they wear out.
  • The penny was 95 percent copper and 5 percent zinc until 1982 when it became 97.5 percent zinc and 2.5 percent copper.
  • The U.S. Mint produces and distributes coins, while the Bureau of Engraving and Printing produces paper currency.

To be honest, I used to view pennies as an inconvenience, but I’ve come to realize that saving these little guys can really add up to a good chunk of change over time. With that being said though given it costs 2 cents to make a penny, that alone makes me think they need to go away. I really don’t think I’d miss them too much, and they would free up some space in our house and in my desk!

So maybe it’s time to do away with the penny. What do you think? Should we get rid of the penny?


19 Responses (including trackbacks) to “Should we get rid of the penny?”

  1. Jon Says:

    The difficulty of getting rid of them would be having all prices round to 5 cent increments. I have a feeling that most items would be rounded up.

  2. Kacie Says:

    Your post inspired me to blog about it myself. I agree with Jon–higher prices would be the end result.

  3. RobY Says:

    Somewhere in there it said it costs about 2 cents to make a penny and about 10 cents to make a nickel.

    So if we get rid of the penny will we need more nickels?

    Or do we need to get rid of nickels too?

    Just my two cents worth… umm, I mean my nickels worth. Hmmm, maybe it’s my dimes worth. I’m so confused now.

    Rob

    P.S. – Nice choice for a post. I look forward to reading everyones opinions.

  4. Jeff Says:

    Jon said: –The difficulty of getting rid of them would be having all prices round to 5 cent increments. I have a feeling that most items would be rounded up.–

    That was my first thought, too.

  5. frugalwannabe Says:

    There was some discussion on another blog that they make pennies on an as-needed basis, and that getting our pennies out of jars, piggy banks, etc and back into circulation could reduce the number they needed to make for a while. I know I have a big jar full of pennies that could be used… Spend them! (or deposit them) ;)

  6. pete Says:

    I say get rid of them, although I admit there would be a difficulty in rounding of prices, etc. Let’s just have all prices be on whole amounts, and get rid of all taxes – problem solved!

  7. kim Says:

    I think as more people use plastic for all their purchases, the need for coins will diminish. You’ll need fewer pennies in circulation so keep making them, I don’t want all items rounded up to the next 5 cents.

  8. Lynnae @ Being Frugal.net Says:

    What would that do to paychecks? I haven’t worked outside the home in a long time, but it seems to me that my husband’s paychecks aren’t always a nice even number. What would that do to the minimum wage or the way salaries and pay periods are determined?

    And I agree with Kacie that everything would be rounded up 5 cents, which I don’t like.

    Can’t they just make pennies out of something less expensive?

  9. Kyle @ Rather-Be-Shopping Says:

    Give them the ax. Heck all you would have to do is empty the little coin holder thingees at all the 7-11′s that read ‘Take a Penny, Leave A Penny’ and that would get rid of 90% of them. :-)

  10. justin Says:

    When we got rid of the 1c and 2c coins in Australia transactions were rounded, up and down, following standard maths rounding rules. Now that most transactions are electronic the rounding only applies to cash based transactions as I found out on my last visit back there.

    As for what would happen to pay checks? You get your pay check direct deposited don’t you? Or you take your pay to the bank and deposit it, don’t you? Then coins shouldn’t even enter into it.

  11. Nathan Says:

    What Justin says has happened in Australia is what I think should happen here in the states. However, I think a consumer protection law would have to be passed, otherwise many merchants would probably round for ALL transactions. Until this happens, I’m opposed to getting rid of pennies and nickels (unless currency was completely eliminated).

  12. Dave@debtfreeearth.com Says:

    If it’s true that it costs nearly 2 cents to make a nickel and a dime to make a nickel, they both should be eliminated from production but still be allowed to be used in circulation. It would be interesting if everyone emptied their penny jars and piggy banks; we probably wouldn’t need to make pennies for a while after that.

    @Nathan and Justin. Not sure I would like Australia’s system. I think rounding only cash transactions would be confusing and tick off most customers. I would just favor doing all transactions anyway. Most of the prices everywhere you go end in 9 anyway (i.e. $ .79, $1.99, $1999.99, etc.). As such, the overwhelming majority of prices would be rounded up anyway. It would really screw things up though, depending on state sales taxes in each state. States would have to adjust their tables to get to that even price point.

    As a side note, it could force gas stations to get more competitive. Many locations price themselves one or two pennies above a their competition but would think twice if it was a nickel or a dime.

  13. RobY Says:

    I think many people here are missing the point of rounding. My understanding here is that the rounding would happen at the cash register on the TOTAL of your purchase after tax. Lets say you buy 30 items at the grocery store and the total is $55.73 after tax. I would then expect to pay an extra 2 cents (if paying cash) to make it $55.75. I don’t expect to pay extra on each of the 30 items.

    In my opinion prices don’t have to go up at all … but I wonder if merchants would use it as an opportunity/excuse to raise prices.

    I say get rid of ‘em

  14. Justin Says:

    @Dave@debtfree: I think maybe I wasn’t clear, the rounding is on the total, at the register. The most that is rounded is 2 cents. I’m not sure that most customers even realise they are being rounded if indeed they are. Petrol pricing in Australia is still along the lines of cents.points of cents listing, for instance today it is an average price of 133.1 cents per litre in Sydney according to the Shell website.

    It wouldn’t screw states up in the slightest, as in my experience sales tax is paid on total sales, not on a transactional basis.

  15. Cat Says:

    Yup, here in Australia our smallest denomination of currency is the 5c coin. (The rest are 10c, 20c, 50, $1, $2 in coins then $5, $10, $20, $50 and $100 in notes).

    When you pay electronically then the total amount of the transaction isn’t rounded. So if you buy $5.74 worth of things then you pay $5.74. If you buy one item costing $12.22 then you pay $12.22.

    When you pay in cash then the total amount of the transaction is rounded as per the standard mathematic rules that someone else was talking about. So if you buy $5.74 worth of things then you pay $5.75. If you buy one item costing $12.22 then you pay $12.20.

    It averages out in the end so you neither make nor lose money.

    And yep, petrol can still sell for 133.4 or 128.2 cents per litre. The same thing applies, at the end I might pay $80.20 in cash when it shows $80.21 on the screen or I pay $80.21 if I’m using my debit card.

    I remember when 1c pieces were phased out but I’m too young to remember if people put up their prices anyway. My gut instinct would be no because we still get things ending in .1, .2, .3, .4, .6, etc all the time.

    Anyway, I hope you find that useful or interesting when thinking about it.

  16. Mike Says:

    Jon said it would be rounded higher.. big deal!!!!! so if something is 3.43 it will be rounded to 3.45 if something is 3.41 hopefully it would be rounded down to 3.40 and if not who cares so you have to pay AT MOST!!! 4 more cents for something besides if you think its such a good idea then that 4 cents wouldn’t matter you would just be throwin them into some change cup somewhere else anyways right?

  17. Jordan Says:

    I’m in an AP Language class in my high school and we are doing an in class paper on this issue. I still have no idea what side I am going to pick. Help me out! Get rid of it or keep it?

  18. dan bill Says:

    I think the penny should not be eliminated because the taxes will rise and a penny for a charity can make a difference

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