The Penny Phaseout: Essential Details 

The U.S. Department of the Treasury has announced that it is suspending the production of new pennies. Here’s what that means for you and how it may affect everyday transactions.

 

Why is penny production being suspended?

The cost to make a penny has increased significantly over time.

  • Ten years ago, it cost about 1.3 cents to produce one penny.
  • Today, it costs approximately 3.69 cents per penny.

By stopping production, the U.S. Mint expects to save about $56 million per year in material costs. With more consumers using electronic payments and the penny having very little purchasing power, the Treasury determined continued production is no longer fiscally responsible.

 

 

Are pennies going away completely?

No.

  • The federal government has stopped manufacturing new pennies, but...
  • Approximately 114 billion pennies already in circulation will continue to be used for as long as possible.

The penny will remain legal tender indefinitely, meaning it keeps its full value and can still be used for payment.

 

 

Can I still use pennies?

Yes. Pennies can still be used for purchases, deposited at banks, and redeemed at face value. As pennies gradually become less available, some businesses may not always have penny change on hand for cash transactions.

 

 

How will cash purchases work as pennies become scarce?

When pennies are not available, businesses may round cash transactions to the nearest five cents.

Common rounding practice:

  • Amounts ending in 1, 2, 6, or 7 cents round down.
  • Amounts ending in 3, 4, 8, or 9 cents round up.
  • Exact multiples of five cents remain unchanged.

Important:

  • Rounding applies only to cash payments. Some businesses may choose to round differently.
  • Debit cards, credit cards, checks, gift cards, and electronic payments are not rounded.


Tips for Consumers

Tips for Businesses
Digital Payments Are Not Affected – Debit Card and Mobile Payment transactions remain exact and unaffected by the rounding. Southern offers several digital solutions for secure, real-time payments.
Promote digital payments to avoid rounding altogether.
  • Southern offers a suite of Merchant Services, ACH payment products, direct deposit offerings, and more.
Rounding Has Started – When paying with cash, businesses may have already started rounding to the nearest nickel.
Consider how your business will round to the nearest nickel, train your staff accordingly, and prepare a brief explanation for customers.
Cash Them In – Bring your coins to one of our branch locations with convenient coin machines and take home the cash.
  • Coldwater Main
  • Union City
  • Hillsdale
  • Battle Creek
  • Sturgis DTO
  • Three Rivers
  • Portage
  • Jackson 200
  • Jackson Summit
  • Sturgis South
Monitor your coin inventory as penny supply varies throughout the year.

What should customers expect next?

  • Pennies will slowly circulate out of daily use based on consumer behavior.
  • Cash transactions may involve rounding at some businesses.
  • Non-cash payments will remain unchanged.

The Treasury is working with retailers and point-of-sale providers to ensure a smooth and transparent transition.

 

Stay informed and learn more here: https://www.usmint.gov/news/media-kit/penny?srsltid=AfmBOorAfnhQrZzLCx3ioqGLuoqJwRbVvtJxUVBFcsmUZXbG1ecpvuNb