How Losing 1-Cent Coins Affects Your Wallet

Written by Michelle Selina

After 100 years in circulation, the U.S. penny is on its way out. In February 2025, the government announced plans to stop making these coins because they cost more to produce than they're worth. Each penny costs 3.69 cents to make, yet it's only worth 1 cent. This means taxpayers lose money on every single penny made, adding up to about $100 million per year.

Many countries like Canada and Australia already stopped using their 1-cent coins years ago without problems. In America, several factors kept the penny around longer: tradition, lobbying by metal companies, and concerns about public reaction. But with most people now using credit cards and mobile payments and metal prices getting more expensive, the penny has become unnecessary. Removing it will save money and make transactions simpler for businesses and consumers.

Why Coins Are More Expensive Than Banknotes

Producing coins is more costly than printing paper currency for several reasons. Coins require metal alloys like zinc, copper, and nickel, which are mined, refined, and pressed using high-energy machinery. In contrast, paper money is made from a cotton-linen blend, printed in bulk sheets, and is more cost-efficient per unit. Coins are also heavier, increasing transportation and storage costs, especially for low-value denominations like the penny.

If a country completely stops producing coins, the impact will vary depending on how reliant the economy is on cash. While there would be some challenges, there could also be significant environmental and business benefits. Here's how it might play out across key areas:

Environmental Effects

  • Reduced metal mining: Less demand for zinc, copper, and nickel reduces mining activity and its harmful effects on ecosystems.
  • Lower carbon emissions: Coin production requires high-energy processes; stopping it would reduce emissions from factories and transportation.
  • Less waste: Fewer coins in circulation means less metal waste in landfills, especially since small coins are often discarded or lost.

Business and Economic Effects

  • Short-term adjustment costs: Businesses may need to upgrade cash registers, pricing systems, and coin-operated machines (e.g., parking meters, vending machines).
  • Long-term cost savings: Reduced expenses in coin handling, storage, transport, and maintenance of coin-related equipment.
  • Digital payment push: The shift may encourage faster adoption of cashless systems, increasing efficiency for both consumers and businesses.

Social and Practical Effects

  • Impact on cash-dependent populations: Older adults, rural communities, and low-income individuals who rely on coins for everyday transactions may face difficulty during the transition.
  • Charity and tipping culture shift: Coin donations and tips may decline, affecting small charitable efforts or informal payment systems.

In the long run, the end of coin production could drive innovation and environmental progress, but it would require thoughtful planning to ensure a fair and smooth transition for all sectors of society.

For the Future

The removal of the penny could signal broader changes ahead. If the U.S. phases out one-cent coins successfully, it might lead to rethinking the necessity of other small coins like the nickel, which also costs more to make than its value. Countries may increasingly turn toward digital currencies, mobile wallets, and even central bank digital currencies (CBDCs). The future of money may be faster, greener, and less physical.

Conclusion

While the penny holds sentimental and historical value, its practicality in today’s digital and fast-paced economy is limited. The cost of keeping it in circulation far outweighs its usefulness. If the U.S. follows through with ending penny production, it could save millions annually, simplify pricing, and reduce environmental harm. With many other countries setting successful examples, the penny’s retirement might just be a small change that leads to a big improvement.

References

Sandberg E. https://money.usnews.com/money/personal-finance/family-finance/articles/how-the-pennys-exodus-could-impact-wallets

Yuhan A. https://www.nytimes.com/2020/11/24/business/coin-shortage.html 

Weissenstein M. and Frederick J. B. https://buffalonews.com/life-entertainment/nation-world/travel/article_afcfd4e0-5343-5f8f-992b-502c061859e0.html

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