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- The U.S. Mint will no longer produce pennies due to rising costs, as each penny costs more than two cents to manufacture.<\/li>\n
- Cash transactions will now be rounded to the nearest five cents, while card and digital payments remain exact.<\/li>\n
- The U.S. previously had a half-cent coin, eliminated in 1857 due to its declining purchasing power.<\/li>\n<\/ul>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n\n
President Donald Trump has directed the U.S. Treasury to stop producing the penny, citing its high production cost and inefficiency, according to a post on Truth Social. With each penny costing<\/a> 3.7 cents to mint, the move is expected to save millions in government spending.<\/p>\n
The decision follows years of debate about the coin\u2019s relevance in an era dominated by digital payments. Other countries, including Canada and Australia, have already eliminated their lowest-denomination coins, adopting rounding rules similar to those now being implemented in the U.S.<\/p>\n
The U.S. previously had a half-cent, which it eliminated as purchasing power declined.<\/p>\n<\/div>\n
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\nHow Payments Will Work<\/h2>\n
Other countries have eliminated their lowest denominations and so it gives us a good sense of how payments will work.<\/p>\n
While card and digital transactions will remain unchanged, cash transactions will be rounded to the nearest five cents. <\/p>\n
For example:<\/p>\n
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- A total of $9.98 would round down to $9.95.<\/li>\n
- A total of $9.99 would round up to $10.00.<\/li>\n
- A total of $10.02 would round down to $10.00.<\/li>\n
- A total of $10.03 would round up to $10.05.<\/li>\n<\/ul>\n
Most major retailers will continue to charge the exact amount for non-cash payments, preventing any significant impact on consumers using credit or debit cards.<\/p>\n
Related:\u00a0<\/strong>Best Free Checking Accounts<\/a><\/p>\n<\/div>\n
\nA Look Back In History: The Half-Cent<\/h2>\n
The U.S. once had a half-cent coin, introduced in 1793 and discontinued in 1857.<\/p>\n
At the time, inflation had rendered the coin nearly useless for everyday transactions, much like the penny today. Its elimination was widely accepted, as larger denominations had become more practical.<\/p>\n<\/div>\n
U.S. Half Cent<\/p>\n<\/div>\n
\nPush To End The Penny<\/h2>\n
The penny\u2019s future has been debated for years, with economists arguing that it slows down transactions and costs more than its worth. In 2023, the U.S. Mint produced over 4.1 billion pennies, despite the coin\u2019s declining use. Rising metal costs and inflation have only intensified calls to phase it out.<\/p>\n
Elon Musk\u2019s Department of Government Efficiency drew attention to the issue last month, accelerating momentum for the change. Trump\u2019s directive aligns with previous proposals to modernize the currency system and cut unnecessary costs.<\/p>\n<\/div>\n
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The penny costs over 3 cents to make and cost US taxpayers over $179 million in FY2023.<\/p>\n
The Mint produced over 4.5 billion pennies in FY2023, around 40% of the 11.4 billion coins for circulation produced.<\/p>\n
Penny (or 3 cents!) for your thoughts.<\/p>\n
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