in General

Penny Abandonment

There are people who want to stop using pennies and instead round change to the nearest nickel. Do you think this is a good idea? I noticed a few places in Brasil doing this. Instead of getting that last bit of change they would just close the cash register. Kind of cool, in a way. Since it now costs more than a penny to even produce a penny, I think it would be a wise step. But according to this article it also takes about 5 cents to produce a nickel. Hmmm… what to do?

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  1. The discount marketing and advertising guys are going to freak. It’s going to take a whole pricing strategy out of their arsenal.

  2. Minting money isn’t necessarily supposed to be a revenue-generating business, is it? Losing money on minting pennies is bad business, I guess. Just a thought.

  3. Noah – Expect a large package in the mail next week sometime. It’s pretty heavy and I sent it COD. Hope you don’t mind.

    Deon – Yeah, they’d freak out but they’re already freaks so what more can we expect? They’ll actually look at the benefits: they just don’t give people change for pennies.

    Jason – I know, since when did it cost more money to make the money than the money is actually worth? Say that 10x fast!

  4. You know, I really don’t think it’s a bad idea. I don’t care how much it costs to create the money in the first place since every penny spent is re-entered into circulation, so it may be used thousands of times before it’s retire. Not a bad return.

    What annoys me is how worthless they are. I mean really, they’re such a small denomination nowadays. Collect 100 of them and you can have a dollar. Collect twenty dollars and you can buy something decent. That’s 2,000 pennies. Not very effective. Sure, you can collect 25 of them and affect a payment for a candy bar but that’s about it. Even then, 25. Damn that’s a lot of change.

  5. Pennies don’t really bother me that much. I usual pay electronically unless I’m out for lunch or coffee. There’s usually a tip jar around to dispose of those wallet cloggers and other loose change. It doesn’t make much of a difference to throw two or three pennies in but when everybody does this it starts to add up. A happier person on the other side of the counter and a better experience for the customer. Everybody wins – and the penny proves its worth.

  6. “…What annoys me is how worthless they are…”

    I guess that depends on where you’re standing, Jordon. I give my pennies to my 5 year-old son. They’re well worth the investment of teaching him some beginnings in the time value of money.

  7. They got rid of one and two cent pieces about ten years ago in Australia.

    It didn’t really make any difference. The prices are still the same, they just get rounded.

    There is a benefit though, if you go to buy fuel, put $10.02 worth in your car, you save two cents everytime! (but only if you pay cash)

    WOOHOO!

  8. Yeh, you know given the cost of having to re-price everything, re-calibrate gas tanks (has anyone EVER gotten an even numbered price of gas?) the effects on the markets, investments, banking, salaries, taxes and insurance. Imagine all the questions and uncertanties from folks now wondering how much their 401(k)s, and other retirement accounts are now worth.

    This would have a MUCH larger impact then just simply saying “bye bye penny”. Might be a very costly move.

  9. Getting rid of pennies does NOT mean getting rid of the concept of 1/100th of a dollar: nothing has to be repriced, nothing has to be re-calibrated. (And on gas, have you ever paid 1/10th of a cent, even though that’s how your gas is priced?)

    When was the last time you actually paid (in cash) exactly 99 cents for something? Here in Arizona it only happens with groceries in some cities; the rest of the time you pay 99 cents plus 7 to 10 cents tax. Even then it’s only if you just buy a single item priced at 99 cents, as otherwise your total is obviously some other effectively-random amount.

    For those that argue things like “I give them to my child,” I completely appreciate the concept but I don’t follow how that’s worth millions of dollars a year in taxpayer money.