In a Feb. 9 post on Truth Social, President Donald Trump announced that he had instructed the secretary of the U.S. Treasury to stop minting new pennies to eliminate waste — producing one penny costs more than 2 cents, he wrote. In fact, each penny costs 3.69 cents to produce in fiscal year 2024, according to the U.S. Mint’s 2024 Annual Report. The Mint lost 2.69 cents per coin, or $85.3 million in total, on penny production in 2024, the report noted.
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Love them or hate them, pennies have been part of the U.S economy for over 230 years. So how will halting production affect Americans’ wallets? That depends on what happens next.
Pennies Are Still Legal Currency
Discontinuing production of pennies doesn’t change the fact that they’re legal tender. It would take an act of Congress to outlaw their use as currency — something lawmakers have been unwilling to do in the past.
What If Pennies Are Eliminated Entirely?
Retail prices usually don’t end in “.00,” so discontinuing the use of pennies would require prices and sales tax to be rounded to the nearest nickel — but only for cash transactions. In Canada, which eliminated its pennies in 2013, check, credit and debit transactions aren’t rounded.
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CNBC, citing a 2017 paper by Canadian economist Christina Cheung, reported that the roundups caused a grocery “tax” of about $157 per person. But Robert Whaples, professor of economics at Wake Forest University, noted in an interview on the university’s website that his survey of convenience store receipts showed that rounding would essentially be a wash, with transactions rounding up about as often as they round down.
Either way, waning use of cash would limit the number of purchases that need to be rounded. While nearly all Americans use cash, they use it less often than credit, debt and electronic payments for purchases at every price point, according to the most recent Survey and Diary of Consumer Payment Choice from the Federal Reserve Bank of Atlanta. The survey, conducted in October 2023 and published in June 2024, found that the more expensive the expense, the less likely Americans are to pay it in cash.
Would Discontinued Pennies Be Valuable?
Relatively few pennies get recirculated because Americans tend to horde them rather than spend them. Whaples said in his interview that the number of pennies in circulation amounts to about 700 per person, yet retailers still have to get rolled coins from banks in order to make change. Even if the U.S. followed Canada’s lead and bought back circulating pennies for recyling, it’s hard to imagine that they’d become so scarce as to appreciate much in value.
Editor’s note on political coverage: GOBankingRates is nonpartisan and strives to cover all aspects of the economy objectively and present balanced reports on politically focused finance stories. You can find more coverage of this topic on GOBankingRates.com.
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This article originally appeared on GOBankingRates.com: Trump Wants the US To Stop Minting Pennies — Here’s What That Could Mean for Your Wallet
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