If You Want People To Keep Using Cash, Support Killing The Penny

Justin Pot 15-05-2015

Paper money and coins are, if you think about it, amazing pieces of technology. They’re the physical representation of an abstract notion: value.


But most “money” in the economy today doesn’t exist physically – it’s digital. When you pay for groceries with a credit card, the credit card company doesn’t send a bag full of cash to the store: they transfer the money electronically.

We’re fast approaching a cashless economy, and in some ways that’s too bad: cash has a lot of advantages. It’s a direct means of transfer: there’s no credit card company or bank involved, extracting rent from any given exchange. This offers advantages: right now, buying things on Craigslist Get the Most Out of Craigslist and Stand Out While Doing It Craigslist has become the go-to site for anyone looking to buy, sell, hire, be hired, etc. However, at the same time, it has the reputation of attracting “sketchy” people. But this article isn’t just about... Read More and heading to garage sales would be impossible without cash.

But fewer people than ever are using cash, preferring the streamlined user interface of a credit card or mobile payment system Everything You Need to Know about Apple Pay, Samsung Pay, and Android Pay Android Pay, Samsung Pay, Apple Pay all have their advantages and disadvantages. Let's take a look at exactly how each of them works and who can use them. Read More . If cash is going to compete in this marketplace, it needs to be simpler to use. It needs to ditch the penny.

The Penny Makes Using Cash Worse

If you’re like most people, there’s some version of this bowl in your house.



Pennies take up space in your wallet – space you’d rather use for something else. So, when you get home from the store, you put the pennies to the side. You’ll roll them later, you tell yourself. You’ll buy coffee with them.

Face it: you’ll never actually roll those pennies. And you’re not alone: people are doing this all over the world, and there’s a reason for it: pennies are worth less than the effort it takes to use them. Most people can’t even be bothered to pick them up off the street.


I’m not saying that, if the penny went away, people would all start using cash. But part of the reason people hate cash is that they end up with useless metal disks.


Pennies, to use tech parlance, are a seriously annoying bug – one that cash needs to fix if it wants to remain competitive.

Inflation Has Rendered The Penny Pointless

There’s quote you might have heard.

“A penny saved is a penny earned” –Ben Franklin

First: Franklin never said that. Second: adjusting for inflation, an early 1800’s penny is worth about 25 cents today. With these points in mind, I propose the following update:

“A quarter saved is a quarter earned” –Unknown

My point is simple: when the penny was worth more, no one saw the need for a piece of currency valued at 1/25th of a penny. Creating something like that would have been stupid, because you couldn’t have bought anything with it.



Today, it’s nearly impossible to find anything that costs one cent. Anywhere.

Seriously: try to find anything that costs a penny. You’ll have to resort to a single nail at the hardware store, but when you try to pay for it with your penny the clerk will probably tell you not to bother – saying to just take the nail and leave.

Which brings me to my next point.


Pennies Waste Time – And Time Is Money

Most people don’t bother with pennies – the main exception are people with nothing better to do with their time. If you’ve ever been in line behind such a person at a store, you know it’s frustrating.


Turns out, it’s not just annoying: it’s expensive.

“Walgreen’s and the National Association of Convenience Stores estimated that handling pennies adds an average of 2 seconds to each cash transaction. –

Two seconds might not sound like much, but over the scale of the US entire economy that’s a massive amount of effort – it adds up to over $2 billion a year in wasted time. Prices at the store are higher because the penny exists.

In fact, pennies are such a time sink people use them to deliberately punish companies they don’t like.

If that’s not an argument for the penny’s elimination, I don’t know what is.

They Cost More to Make Than They’re Worth

In review: pennies are generally considered worthless by the general population, and cost the American economy $2 billion of lost productivity every year.

But it gets worse: they’re also created at a loss.



According to the US Mint, it costs 1.7 cents to produce a single penny – and the US makes a lot of them. So many, in fact, that getting rid of the penny would save the US government $52.9 million a year.

Sure: that’s not a huge amount in the context of the overall US budget. But that’s hardly an excuse for wasting millions of dollars on something that hurts the economy.

Canada Already Ditched Theirs – It Was Fine

“But you can’t just get rid of the penny!” you might be saying. “How would that even work?”

We don’t need to imagine that, because Canada already did it. YouTube genius Net Neutrality, As Explained By YouTube’s Geniuses Are you still not sure what Net Neutrality actually is? Don’t feel dumb: it’s a nuanced concept. So, we tracked down videos from some of the smartest people on the Web. Read More CGP Grey explains:

Prices didn’t go up, and the world didn’t end. There are just fewer useless coins in circulation – that’s it.

Cash Needs to Become Better

As I said before: cash has a lot of advantages, but is disappearing anyway. Part of this has to do with the Internet: it’s not practical to use cash to buy things online. Some people are creating their own currencies to fill the void Currency Of The Revolution, Or Tool For Online Vendors? The Many Faces Of Bitcoin [Feature] It's become an annual event: the fall of Bitcoin. You've probably read about it multiple times, and maybe even believe that the online, decentralized currency is already gone forever. It isn't. Created by a mysterious,... Read More – countries should look into doing the same thing.

But cash is in decline offline too. If you care about cash, you want the experience of using it to be as good as it can possibly be. Getting rid of the penny would be a great first step, and would save the government millions – and the economy billions – as a side effect.

Disagree? Let’s talk below! I’m hoping for a great discussion.

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  1. Some Guy
    May 15, 2016 at 9:48 pm

    The problem is company are selling things for like 9.99$ or something like that, if you are buying something with cash then you have this extra penny that is not worth anything

  2. Kelsey Tidwell
    May 25, 2015 at 8:15 pm

    It'll end up in your One-A-Day vitamins.

  3. Kevin M
    May 21, 2015 at 4:39 am

    The penny is the product of any business that sells to idiots that think that product or service they are purchasing for $14.99 is a real steal at $14 instead of the reality price of $15. The penny will continue to be a vital part of our lives until the idiots learn math and that means the penny will NEVER go away!

  4. GG
    May 20, 2015 at 9:05 am

    Yes, drop the penny. But most of all, enough of all these stores showing their prices ending with ".99"!!!
    Silliest marketing trick!

    And btw, "Penny wise, Pound foolish"

  5. A41202813GMAIL
    May 20, 2015 at 12:24 am

    I Only Use Digital Money In The Order Of About $300 A Year.

    I Use Hard Cash All The Time, And I Use Retail.

    Getting Rid Of The Smallest Coins Is Stupid.

    Why ?

    Retail Shops Take Every Opportunity To Increase Prices, Even By A Few Cents.

    Some Of Them Already Round ( Always Up ! ) Prices To $.05 Or Even $.10.

    If You Get Rid Of The Smallest Coins You Are Only Helping Them Abuse Prices.

    My Country Changed The Old Currency To euros About 15 Years Ago.

    Even After Considering Inflation, You Would Blow Your Brains If You Compare The Prices From Before And After The Change.

    Do I Get Small Coins In Exchange ? - Hell, Yeah !

    But The Next Time I Buy Something, I Am Not Going To Waste A Bill Or A Bigger Coin If I Have Smaller Ones, Period.

    The Cheapest MCDONALDS Burger Costs $1.

    If You See Me As A Homeless Person On A Street Some Day ( The Chances Are Becoming Not That Far Fetched Every Day That Goes By ), I Assure You That I Will Not Refuse A Sock Full Of Cents.


    • Justin Pot
      May 20, 2015 at 3:00 pm

      (It's really hard to read something when you Capitalize Every Word like that, FYI.)

      As another commentor pointed out, in Canada most stores are rounding down, not up, because losing 4 cents in a transaction is insignificant compared to the good will rounding down generates. I think would be the same way everywhere.

      The key point: pennies are so little money that it's not worth thinking about.

    • A41202813GMAIL
      May 21, 2015 at 11:21 pm

      Thank You For Responding.

    • A41202813GMAIL
      May 21, 2015 at 11:27 pm


      Taking The Grocery Trip As An Example:

      When I Say They Round Up The Cents, I Am Not Referring To A One Time Rounding Of The Sum Of All The Purchases Made, I Am Talking About Rounding Up Every Single Item.

      Sorry, Again.

    • Justin Pot
      May 22, 2015 at 2:12 pm

      Well, in Canada the prices stayed the same, and if you pay with a credit card nothing is rounded up or down. The difference is that if you pay with cash, the transaction is rounded to the nearest five cents. I imagine this would work the same elsewhere.

      And maybe stores in Canada are only rounding down instead of up because of typical Canadian politeness.

      "I can round up, it's fine."
      "No, I insist, please round down."
      "No it's okay, I can round up, it's just a couple of cents"
      "I insist, round down..."

      And so on.

  6. William L
    May 19, 2015 at 2:16 pm

    As a Canadian who has lived through the demise of the penny, I can attest that my pockets are lighter and there's no "penny jar" anymore. The latter has been replaced by a "nickle-and-dime" jar, though. By now, most retail outlets have had algorithms built into their cash registers so that when a cash transaction is made, it does the rounding and tells the mathematically illiterate what the cash amount or what the cash change is. Debit and credit card transactions have been unaffected. If anything, I have had the rounding effect of cash transactions work in my favor: several large chains always round down to the nearer nickel, as a nod to their customers (i.e., "We always round in your favor.") Frankly, the only place where I have seen much angst with respect to rounding to eliminate pennies is in elementary-school math classrooms, where teachers themselves are having trouble enough with the concept and operation of "normal" rounding, let alone rounding to the nearer 5. Go for it, American cousins! (and BTW, take a really big leap and kill off 1$ bills, too.)

    • Justin Pot
      May 20, 2015 at 3:01 pm

      Yes, nickels and dimes should probably go next, but one thing at a time. :)

      The point about teaching kids how to round up and down is very interesting, but it's also probably another benefit of this approach. Rounding is an important skill in other areas of life, after all.

      As for the dollar bill: I'm not sure that's happening any time soon.

  7. Chatfield
    May 19, 2015 at 5:33 am

    I'm another Canuck, and have found getting rid of the penny might be the only smart thing our present government has done. We are still messing with gasoline prices that end in nine point nine cents, ie: 89.9 cents - just crazy, but most people will call that 89 cents, not round up to a more realistic 90 cents.
    Canada also got rid of $1 and $2 paper money, replaced with a $1 and $2 coin, these likely last for decades, another smart move given that continuous inflation wipes out actual buying power of lesser valued coins or bills.

    • Justin Pot
      May 19, 2015 at 1:18 pm

      It's really interesting, in the US it may or may not make sense to switch to dollar coins. The reason: the cotton-based currency they use here lasts long than paper money does. It's not as tough as the plastic money they have in your home and my native land, though.

    • Kelsey Tidwell
      May 25, 2015 at 8:08 pm

      Justin, I'm sure you know that we in the States have had dollar coins offered to us a few times, and they've just never been a crowd favorite. Personally, I can say that the less bulk and weight in my pockets the better, so I'll always rather have my "folding money". :) Where I work we actually don't like it when we get dollar coins because there's no conventional place in a cash register to keep them. They're always considered an odd, extraneous be traded in at the bank or given back to a customer as quickly as possible. But hey, even 50 dollar notes fall into that category too. I don't feel that businesses will ever take the initiative to change pricing structures in order to end the need for pennies here. The guvment will have to force that by just taking them away. They're so good at taking my money already in taxes that I don't see what the hold up is. :D

  8. Judy
    May 19, 2015 at 1:41 am

    Some US states used to produce a Mill coin. They were worth $0.001 - 1/10th of a penny. I remember my Grandmother in Missouri having them in her coin purse in the 40s. I think the smallest US currency ever produced was the 1/2 penny coin. I agree we should stop using pennies - I always leave mine behind on purpose when shopping and pray there will be a penny saucer when I owe $10.56 or similar! If not, I round up to the nearest nickel and ask to pay that.

  9. Craig
    May 18, 2015 at 11:57 pm

    Wouldn't be the first time we've retired a piece of currency that has outlived it's usefulness. Anyone seen a half-cent coin recently? Pennies and dollar bills belong on the list of things the class of 2040 should never have seen.

    • Justin Pot
      May 19, 2015 at 1:16 pm

      Well put, Craig.

  10. Patrick Piklapp
    May 18, 2015 at 11:53 pm

    Think how many pennies you would save if we moderated the amount tax you are charged at the store and federal taxes. You are charged at the pump, the counter and at the end of the year. All three times there is federal, state, and local governments reaching into your pocket to fund things that you really don't have any say over. We are now being taxed without represented and that was the cause of the Revolutionary War.

    • Justin Pot
      May 19, 2015 at 1:16 pm

      You have representation, and you have say. If you really think the USA isn't a democracy, move, but you'll find that you're leaving one of the lowest tax rates in the developed world.

    • Patrick Piklapp
      May 20, 2015 at 10:59 am

      Funny as the majority of people don't want fast tracking of TPP and yet it will happen, most people want the borders secured, but Congress has cut the spending on that. Most people want our veterans taken care of, but Congress yet again does everything to avoid getting that done. You say I have representation, but the evidence shows that is a lie!

    • Justin Pot
      May 20, 2015 at 3:03 pm

      The people making these decisions were elected by the people, it's not the system's fault that they elected people who disagree with them on certain issues.

  11. Bob
    May 17, 2015 at 2:49 pm

    You have the right idea...but go for the nickles, too. If the economy could function with the equivalent of .25 as the smallest division, surely it would function with .10 as the smallest! Think how much space and weight two nickles take up compared to one dime.

    • Justin Pot
      May 18, 2015 at 1:09 pm

      I think that ideally you have a dime, a fifty cent piece, and a one dollar coin. Much more efficient.

  12. Mike Merritt
    May 16, 2015 at 8:10 pm

    Hi, I'm a Canadian, so here's how it goes. Yesterday I bought an item of $1.07 (total including the tax). If I had paid with a Credit Card or Debit Card, it would have been transacted at the $1.07 amount (to the nearest penny). As I was, I gave the clerk $1.25 cash (a dollar and a quarter) - the amount displayed on the Cash Register changed to $1.05 and she gave me back $0.20 (two dimes). However, if the item that I was purchasing had been only 1 cent more ($1.08); I would have seen the corrected price change to $1.10 and my dollar plus a quarter tendered would have returned only $0.15 change (a dime and a nickel). The cash register still records the exact amount (to the penny) of each purchase and adds them all up for the end-of-day report. The cash in the til is up a few cents / down a few cents all day long; and by the end of the day, it's more or less correct (to within a few pennies).
    Note: some cash registers don't do the automatic rounding - the clerk just does it in her head; but the effect is the same.
    Also notice that because the cash register records the exact amount of the sale and the exact amount allocated to sales tax, etc. - the sales, taxes, profit, etc. for the store all remain correct, it's just the cash-in-the-drawer that may be under or over by a couple of pennies from time to time.

  13. John R
    May 16, 2015 at 11:22 am

    It would make a lot of sense to get rid of the penny but I doubt if it will happen. You will get a lot of grandstanding by politicians talking about its sentimental value and how we are hurting the poor because all the stores will raise their prices up to the higher nickel.

  14. ryan
    May 16, 2015 at 5:48 am

    What am I supposed to stuff my socks with and use a weapon now? Credit cards?

  15. Kai
    May 16, 2015 at 5:24 am

    In Australia we got rid of 1 & 2 cent coins about 25 years ago (wow - didn't realise it had been that long) leave 5c as our smallest coin..
    When shopping, the total is rounded to the closest 5c, whether that's up or down. You can scam it slightly if you can be bothered (e.g. getting 2x 0.57c items = $1.14 rounded up to $1.15, whereas buying them in 2 transactions = 0.57 rounded down to 0.55c x2 for a total of $1.10). I'm sure some people did that much to the annoyance of cashiers, but for a saving of 5c it's hardly worth it unless you're in dire straits financially).
    My only annoyance (and it's extremely minor) is going to pay for something and the total is something like $32.48 - generally a cashier will round by themselves and say that the total is $32.50, which it is if you pay by cash. If you pay by card, then there's no rounding so you're charged the actual amount of $32.48. Like I said, very minor annoyance :)

    Mind you, now 5c coins now attract a similar level of annoyance as 1 & 2c coins used to so maybe they'll be gone in the near future..

  16. dragonmouth
    May 16, 2015 at 12:12 am

    "Prices didn’t go up"
    Didn't the prices get rounded UP to the nearest "5" or "0"? Or did the prices in Canada always end in "5" or "0"?

    • Bruce E
      May 16, 2015 at 5:43 am

      If they handled it the same way the US military did on their bases back in the day they simply rounded to the nearest nickel, not necessarily UP. It always tended to average out properly so prices are effectively unchanged.

  17. Paul R.
    May 15, 2015 at 4:30 pm

    I'm all for it. We could either round items up or down to the nearest nickel, or just get rid of that hundredths place altogether and pay $1, $1.10, $1.20, etc., for stuff.

    As far as the argument that a penny might cost more than a penny to make, but it still has utility, b/c it is handled many times--I think that is actually a negative. A virtually worthless peice of metal that continually changes hands because it is legal tender, still wastes everyone's time.

    I'm glad I read this---that I'm not the only one who feels like this.

  18. AriesWarlock
    May 15, 2015 at 4:16 pm

    Another advantage of cash is government can't track you with it.

    • Doc
      May 15, 2015 at 5:30 pm

      Yep. There' no such thing as serial numbers, fingerprints, or chemical tags. Perfectly safe.

    • Mike Merritt
      May 15, 2015 at 6:30 pm

      Take a couple of $1000 bills into a Bank and ask to deposit them into your bank account; and see what a hassle you get. (Proceeds of crime ?)

  19. Mike Merritt
    May 15, 2015 at 4:04 pm

    The cost of manufacturing a penny has nothing to do with it's utility. Each penny is handled many, many times at it's face value of 1 cent ... so who cares how much or little it costs to make it. Of course, the constant need to manufacture new pennies is caused by those pennies going out of circulation by selfish "Penny Hoarders". Sooooo ... Spend your pennies; save the Mint a fortune !!! Ha !!!

    • Doc
      May 15, 2015 at 5:29 pm

      Geez. "It's" means "it is" or "it has," use "its" when you want to use a possessive ("his," "hers," "its").

    • Justin Pot
      May 15, 2015 at 5:51 pm

      I saved the cost for last, because the real problem is that the penny's utility is negative. Just having them in circulation hurts the economy.

    • Mike Merritt
      May 15, 2015 at 6:27 pm

      @Doc - thank you for being the Grammar Police and keeping the Internet language pure; while not understanding anything about what was written either by me or the author. Of course, you probably don't even know what "Geez" means; and yet you start your sentence with it ! Ehhh ! (I'm Canadian).

  20. reinkefj
    May 15, 2015 at 4:02 pm

    I disagree. The penny is an in your face constant reminder that the Gooferment, specifically the FED (i.e., Ferderal Reserve Bank) ... ...

    -- The Federal Reserve Bank is a misnomer. IT ain’t “federal”. It reserves nothing. And, it ain’t a “bank”. It is a private cartel of the elite banks run for their benefit and that of the entrenched politicians. --

    ... ... stolen the wealth of the world by inflation. I insist on ranting every time some wants to get rid of the penny, by pointing to Ron Paul and the evils of fiat currency.

    Without the Fed's fiat currency, WW1 and WW2 could not have been fought and the current welfare / warfare state would be impossible.

    The penny is the "canary in cage" for the national debt, the deficit, the unfunded liabilities, and the out of control spending.

    Keep the penny and let's not forget WHY it's worthless!

    • Brian S
      May 15, 2015 at 4:44 pm

      Wow, you dumped out a whole bag of crazy there.

    • Justin Pot
      May 15, 2015 at 5:53 pm

      I can honestly say I've no idea what your point is reinkefj.

    • Howard Pearce
      May 15, 2015 at 10:05 pm

      The penny is worth less because people demand it less or the supply has increased ?

      Guess which one it is and who did it !

    • Justin Pot
      May 18, 2015 at 1:20 pm

      Japan's economy has struggled through the 90s and 2000s because of massive deflation. If you think inflation is universally a bad thing, there are decades of economic data you need to content with.

  21. ReadandShare
    May 15, 2015 at 3:00 pm

    Can't wait for our government to finally get rid of the penny...

    • Justin Pot
      May 15, 2015 at 3:11 pm

      I have a feeling people who disagree with you will show up here shortly.

  22. WiseIdiot
    May 15, 2015 at 2:12 pm

    I'm curious as to what the government would do with all of the now useless pennies out there. They're copper-played zinc (I think), so what would we do with tons of zinc?

  23. kt
    May 15, 2015 at 2:09 pm

    Great article, and I agree about the penny. In 1982 they stopped using copper which made their value higher than face. There is an all out war on cash by the big banks and some govs right now. Depositing or withdrawing too much will get you a place on an investigation list. Having too much on you will get you detained by police in some areas. There are a lot of examples why a cashless world will have negative effects like privacy and replacing human tellers and cashiers with automation.

    • Justin Pot
      May 15, 2015 at 3:10 pm

      Yeah, cash gets a bad rap but I still think it's useful. Did you hear about the connivence store owner who had his assets seized just because he mostly deals in cash? Insanity.

    • Doc
      May 15, 2015 at 5:28 pm

      Yeah, it made real sense to switch from copper to zinc if the zinc is worth more. Who told you that? Why would they even do that?

    • kt
      May 15, 2015 at 11:54 pm

      Sorry Doc, I meant pennies were worth more when they were copper. Money used to be a store of wealth, but with NIRP and ZIRP, that is no longer the case.