Econified

The United States has officially minted the last U.S. pennies. This means that there will not be any new pennies added into circulation. The pennies had a 232-year production run, and, in 2025, they are no longer being minted.

Why were pennies discontinued?

The short answer is that pennies were discontinued because they are essentially worthless. It costs the government 3.69 cents to produce 1 cent in value. This is because the costs of materials that produce pennies have gone up with inflation. Every penny that the U.S. mints costs significantly more than it is worth. It is an economic strain on the government, and the loss could no longer be justified.

This is not to say pennies have no value to the economy. They still are still legitimate U.S. currency that can be used to round transactions. However, inflation has also made the pennies less valuable for the public. Pennies used to be able to purchase some items. Inflation has hard a large effect on purchasing power of money. The purchasing power of a penny is so limited, that it cannot be used for anything by itself. Small candies today typically cost $0.25 at a minimum. It is very cumbersome to carry around enough pennies to purchase anything. It’s only use is for paying exact change or receiving exact change.

Additionally, more of the public are utilizing cards for the majority of their transactions. The rise of direct depositing paychecks means that individuals carry less physical currency. Instead, many Americans rely on debit or credit cards for their purchases. Even if individuals carry cash, they oftentimes do not have exact change for every transaction. This means that pennies are less utilized now than ever before. The value of carrying them has gone down, and the costs to produce them have gone up. For these reasons, pennies were discontinued.

What does getting rid of pennies mean?

Very little will actually be changed by getting rid of pennies. Digital payments should not be effected. That currency value still exists, so banks will still track that value in transactions and account values. However, difficulties may arise when trying to withdraw pennies from your account as physical currency. Banks will eventually run out and will not be able to pay out the exact change. This really will not be too noticeable as nickels will still be around. This means, at most, the transaction will be impacted by 4 cents. For an individual that withdraws money once a week, this impact will not be greater than $2.08 a year. This is a negligible amount.

Similarly, cash transactions will also be impacted. Transactions will have to be rounded to the nearest 5 cents instead of the nearest penny. Because of taxes, it is impractical for businesses to try to reprice items to end in a 5 or 0. With a lot of transactions, this could have minor impacts for a business. On average, the amounts being rounded down will negate the amount being rounded up. If an organization chooses to round every transaction up, the impacts on consumers will still be very minimal.

Realistically, this is something that should have happened many years ago. With recent high levels of inflation, it only made the problem more obvious. Additionally, newer technology made cash transactions less frequent and important. Pennies no longer provide enough value to consumers to justify their cost to the government.

It is hard to say if getting rid of the nickel is in the future. Nickels have the same problems as pennies do, but they are slightly less problematic. It costs 13.78 cents to produce a nickel, but the value for the economy is higher. The government will make sure getting rid of pennies has no major negative effect before they phase out nickels. I fully expect that nickels will be gone as well within the next ten years.