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Let's Discuss: Should We Be More Like Canada and Ditch the Penny?

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By , dealnews Media Editor

Earlier this week, Canada officially killed the penny. Realizing that it was costing the government more to mint a penny than the face value, our neighbors to the north made the tough decision and kicked the penny to the curb. Canada won't be making new ones, and the ones in use will slowly be removed from circulation.

The question is, should the United States follow suit?

Consider this: In 2013, due to materials and production, a U.S. penny cost the government 2.41 cents to produce. Since 4.3 billion of them are minted each year, that'll be a $103,630,000 loss! The first year it cost more than one cent to craft the penny was in 2006, because the cost of zinc and copper have both continued to rise over the years.

For the past couple of years, the Mint has been investigating new materials in penny production, but so far nothing has measured up. They cannot find a replacement that gives the feel and look of a penny while still giving it the same conductivity (necessary for vending machines and other coin-slots which use electricity to determine what coin you deposited), too.

Canada is handling this new situation by having the merchants round the total to the nearest nickel for those paying in cash. It seems like a good idea on paper, but have you ever been charged $4.99, only to hand over a fiver and not get a penny back? You feel like it's stupid to complain, but it still rankles you, right? Now imagine that happening with two cents every time. There might be some ill will.

What do you guys and gals think we should do? Should we continue investigating new ways to produce the penny, in the hopes that we can keep it? Or, should we just cut our losses and get rid of it? In other words: Is change good, or should we change?

Photo credit: Long Creek to Watoto



Jeff Somogyi is the dealnews Media Editor. See more of his thoughts on Google+, Twitter, or on his blog.

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Please note that, although prices sometimes fluctuate or expire unexpectedly, all products and deals mentioned in this feature were available at the lowest total price we could find at the time of publication (unless otherwise specified).
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24 comments
radevers
oops, should have been "2 for 59 cents and have to pay 30 cents"
radevers
Yes, the US should eliminate the penny. We get by OK without having a 1/10 cent or 9/10 cent coin to pay for gas. We buy sometimes buy one item that is priced at 2 for 59 cents and have to pay 25 cents for one. We buy many produce items at the supermarket that is priced in so much per pound and it gets weighed at the checkout and the weight is converted to the cost--somehow the cost is rounded up or down to the nearest cent and no one complains. We survived in 1909 when the penny was the smallest coin; now prices are probably 30 times higher than they were then and no one wanted to mint a 1/50 cent coin. We should also stop printing one dollar bills and use the one dollar coins instead.
peterspina
Ditch the Dollar. Fiat paper money, controlled by a private bank, lost 98% of its value since the private central bank was established, run behind closed doors, meeting in secret to set monetary policies, anti-free market body. The dollar is a fraud, it is illegal by our own constitution, monopoly money.. its anti-american.
Nothing backs this money except faith and trust in corrupt banksters. wake up america. wake up world. be free. we need money of trust and integrity.
csn0
Some stores in Canada have committed to always rounding the price down to the nearest 5 cents, presumably for marketing value.
vwoom
I'd rather see the Federal Reserve get ditched first than the U.S. Penny..
Jens24
Before dropping the penny let's drop the $0.009 on a gallon of gas!!! Talk about dumb! Also stop the paper one dollar bill on average they only last 6 weeks. Do dollar coins like most of the world. Coins last for many years!!
billtowne
Your math skills are quite poor. Here in Minneapolis the sales tax rate is 7.775%. So when I buy something for $4.99, with tax it comes to $5.376725. Last I knew, we've been rounding off anyway, just to the nearest cent. Half of the time we round up, half we round down. The same would be when we get rid of the penny (or penny and the nickel). There would be no net gain or loss with "rounding" to the nearest penny or nickel or dime. Let's ditch the penny.
GregoryNP
Drop the penny, nickel and quarter and just have a half dollar an dime
teharr
Wow. If you would like to really learn a thing or two about money, the question you should be asking yourselves is why the penny has become worthless. I only saw one comment that saw this for what it is, inflation! The penny used to be valuable and buy a lot of the things that you can no longer buy with even a nickel, dime, or a quarter. Inflation is not an increase in the cost of goods, it is a decrease in the purchasing power of your money....YOUR MONEY!!! If you really understood what was being done to the fruits of your labor, you wouldn't be so quick to just laugh the penny off. You would be angry that your purchasing power has been stolen from you like a thief in the night.
spferdil
Before getting rid of the penny, how about we get rid of the ridiculous 9/10 of a cent on the price of a gallon of gas?
kingrampks
You would also have to take into account the expected increase in nickel utilization. The nickel, like the penny costs approximately twice the face value to produce, however, it is 5 times costlier than the penny.
Other factors such as increased utilization of electronic payments will need to be weighed in as this could result in the mint producing less coins per year and cutting losses.
Personally, I don't really see an issue with keeping a pennies conductivity similar with a new formulation. What vending machines are taking pennies anyways?
Per the rationale of removing the penny due the the cost/face value the mint should consider removing the nickel too, although they likely produce far less nickels than any other coin.
http://www.usmint.gov/...tion=faq_circulating_coin
LonnieMcClure
I suspect many businesses would adopt the policy of always rounding down, simply because it wouldn't be worth the hassle caused by the occasional customer that would go ballistic over being charged 1 or 2 cents more than they "were supposed to pay".

If you say, "That would never happen", I'll wager you've never worked in retail. :)
AlexR1973
Idiots! I lived in other country when the same situation happend 20 years ago. And what happend after that? The answer is simple - hyper inflation. At the start of the year my salary was, for example $2000 per month (digits just for a comparision only), at the end of the year it was $600.000 a month, but I could buy less for this ammount of money. 1 year after that goverment had to cut 000 from the currency, and my salary again became $2000 a month, but for the same ammount I couldn't buy what I can afford 2 years ago. Everything started with "ditching the penny" idea. Do you expect a different scenario in USA or Canada? Did you realize that from 2008 prices for food increased at least 100%? We have kind of a stable situation right now, don't push it to the limit with stupid desigions like removing the change from everyday life.
grumpy
Absolutely... At a merchants discression, they should be allowed to round a total bill up by as much as 3 cents if they also round bills down by as much as 2 cents for cash transactions. They should not do this for electronic exchanges. The government should not abandon the penny, but should simply stop making new ones... all existing pennies would remain leagle tender and could be used to pay a debt for merchants willing to accept them. The government should stop circulating them & collect them over the next 40 years, so anyone who hoarded them will not legally get a good return.
Crismodin
Yeah the penny is kind of pointless. What we should really be doing in the States is including taxes and what not in the final price instead of pricing something at $5 and it comes out to be like $5.49 ... Wouldn't it just be easier if the final price was set when buying something. I've always wondered why we do it the hard way.
extensivegroup
We should have ditched the penny ages ago. Why not? ZINC lobby. UGH. Look it up.
herlog425
It just makes too much "cents", which is exactly why government won't do it. Too bad, cuz the extra $103 million would go a long way toward paying for Obama's vacations.
dealnews-Lindsay
@fiedav Metric system?! You've gone TOO far, sir!
fiedav
I come from England, where the lowest denomination is a penny or 1/100 of a pound. That means the lowest amount in currency is $001.6, or 1.6 cents. Somehow England keeps going.

The highest value coin with no banknote equivalent is two pounds, or $3.20. The English pound note was replaced by a coin in 1988.

This seems a much better system than the U.S. method - there are many people who save pennies in a jar, and then take them to a bank or change them in machines at supermarkets (paying a lot for the privilege). They don't have any high regard for the penny.

I think that the U.S. should remove the penny, and make the lowest value coin the nickel. Then withdraw the dollar bill and replace it by a coin.

And then we can go on to adopting the metric system :)
skeedunt
A bar code tattoo on the wrist and just get rid of all currency would solve all those problems.
Fred Shoemaker
There is no problem with our coin denominations.

The answer is to eliminate the Federal Reserve which is mostly foreign owned

and creates money out of thin air in the form of currency and digital credit

card money. This practice has inflated our currency and driven costs up.

I

have no idea what Canada does and could care less.

Is Jeff an expert in economics? Jeff this country's economic system is

Keynesian economics. Is this system as good as Austrian economics or any

other system? Please explain the differences in these systems before you

blog to the ignorant. We are currently trillions in debt thanks to the

Keynesian system which has driven costs for everything off the chart.



Jeff as this article is shallow leaing most will bite the bullet on costs as

they are ignorant of economics when that is not the problem. The problem is

the inflationary Fed.
rockelscorcho
I agree that the penny should be removed from circulation. Many people hate them so much, they won't even pick one up from the ground. Currently, more people pay with debit or credit, which again, makes the penny more useless. The raising of prices isn't too much of a big deal if you are dealing with cash. Additionally, it seems rather foolish to still make something that costs more to create rather than its worth. The USA seems to function on how things look or feel rather than logic. It's more cost effective to eliminate the penny because it's too expensive and no one wants it. So, why are we still making it? Probably because of copper lobbies and reluctancy to change.
madonnell
We already round ... to the penny (you think 7.9% tax on a $1 item comes out to exactly 7c or 8c?). And due to inflation, that penny is worth something like 1/25th of a penny 100 years ago. So lets round to the nickel (... or dime ... or even quarter)! Saves 100s of $millions a year!

Here - I'll start ... https://petitions.whitehouse.gov/...-year/YFrlqnjS
The0ldMan
Yes, you lose 1 or 2 cents if something costs $0.98 or $0.99 but when it's $1.01 or $1.02 you win, so it all cancels out. If every price in the store ends in a 3 or 8, once you buy an even number of items, you get the pennies back. There's no easy way to cheat the system.

I wouldn't miss the nickel either if we get rid of it as well. Dimes, Quarters and Dollar coins would be ideal.
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