Many Americans consider the 5-cent coin and 1-cent coin more of a nuisance than actual currency, according to data from the Federal Reserve. On average, a typical household has $60 to $90 worth of coins lying idle, leading to millions of dollars being discarded each year by Americans, almost like throwing out trash.
The “USA Today” reported that, based on Federal Reserve data, in 2023, only 16% of consumer transactions in the United States were made with cash. A Pew Research Center survey in 2022 found that two-fifths of consumers do not use cash at all.
President Trump has ordered the U.S. Treasury to halt the production of 1-cent coins due to their production cost exceeding their face value.
Coins are real money, so why do Americans treat them like garbage?
It’s evident that coins hold value. Coinstar, a common coin-counting machine found in supermarkets, exchanges $3 billion worth of coins into spendable cash every year. Most people underestimate the value of the coins they have, so a trip to a coin-exchange kiosk (or a bank, credit union) could bring about unexpected surprises.
Kevin McColly, CEO of Coinstar, said, “People underestimate the value of their coin jars; it’s a really fun experience, like finding money.”
The Federal Reserve found that certain groups of Americans, such as low-income households and individuals over 55 years old, still use a significant amount of cash, while some prefer shopping in physical stores.
As for others, McColly believes it’s time for a shift in mindset. Instead of treating coins as clutter, view them as recyclable.
“They are metal,” he reminded, “and they have a long lifespan.”
According to “CoinNews” magazine, the U.S. Treasury still produces over 5 billion coins annually, but this number is declining.
“Those are natural resources from the Earth,” McColly said, noting that 1-cent coins are made of copper-plated zinc, while 5-cent, 10-cent, and 25-cent coins are made of copper-nickel alloy.
His perspective is that if Americans take idle coins seriously and “recycle” them back into the currency system, mints wouldn’t need to produce as many new coins.
Kimberly Palmer, a personal finance expert at NerdWallet, said, “You can go to your bank or credit union and not pay a fee.” To ease bank tellers, it may be necessary to roll the coins into tubes.
Indeed, Coinstar deducts a small commission from coins deposited by consumers. McColly pointed out that if depositors opt to exchange coins for retail gift cards rather than cash, Coinstar often waives the fee.
Ted Rossman, a senior analyst at Bankrate, said, “We are much slower in adopting mobile payments and contactless credit cards compared to parts of Europe and Asia.”
This pandemic has reminded us of how reliant we are on cash: during global lockdowns, consumers and business owners hoarded coins, leading to a genuine coin shortage.
“It almost froze the entire system,” Rossman said.
While the Trump administration only directed the mint to cease production of 1-cent coins, some are urging the U.S. to stop using them altogether.
On April 30th, the bipartisan “Coin Modernization Act” proposed by lawmakers would round cash transactions to the nearest 5 cents.
New York Democratic Senator Kirsten Gillibrand said, “The 1-cent coin is outdated, inefficient, and no longer meets our economic needs.”
The government loses nearly 3 cents for every 1-cent coin minted, and for every 5-cent nickel, it loses nearly 9 cents, with larger quantities of nickels leading to higher losses.
If both the 1-cent coin and 5-cent nickel were to be phased out, how would consumers pay a bill of 15 cents?
If all prices were rounded to the nearest 10 cents following the “Coin Modernization Act,” what would become of the 25-cent coin?