The penny's final chapter: What it means for you

The U.S. Mint has stopped making new pennies and currently has no plans to resume production. If you're unsure about what this means for buying and selling, here are the ways it may affect you and how we're here to help.

Why is the penny discontinued?

The Secretary of the Treasury decided to stop making pennies because each one costs about 3.7 cents to produce. Ending production of the penny is expected to save taxpayers approximately $56 million each year.

Additionally, the U.S. penny has also lost purchasing power over the years. In 1940, you could buy a cup of coffee for just 16 cents. Today, that same cup of coffee costs around $3.50 or $4.00.

Why is there a penny shortage?

Although most U.S. retailers haven't fully transitioned away from the penny just yet, news of its phaseout has already led to fewer pennies in circulation. Reasons for the shortage include:

• Home coin collecting: Many people toss their pennies into a jar without giving it much thought. Because pennies have so little purchasing power, using the coins to buy something or depositing them into a bank account often isn't worth the hassle, leading people to keep hundreds or even thousands of pennies in their homes.
• Fewer pennies recirculating: As more people shift to cards and digital payments, fewer cash transactions occur, which means fewer pennies cycle back through stores and banks. Overall recirculation drops and contributes to shortages.
• Limited Federal Reserve distribution: The Federal Reserve supplies U.S. coins to banks. As inventories shrink, some distribution centers have stopped fulfilling penny orders in some locations.

What does penny discontinuation mean for customers and businesses?

The end of penny production doesn’t immediately change how you spend when buying groceries, gas, office supplies and other essentials. Existing pennies are still legal tender. You can continue to use them for purchases, and you may still receive pennies as change when you pay with cash.

Retailers that only accept debit, credit and digital wallet payments likely won't be directly affected by the penny shortage. However, with fewer pennies in circulation, many businesses that still accept cash may adjust their pre-tax prices so that the final total after sales tax naturally rounds to the nearest nickel. For example, instead of pricing an item at $9.99, a retailer might change the price so the after-tax amount comes out to an even $10.00 or $10.05. This helps avoid using pennies altogether and makes receiving and giving change simpler for both customers and cash-handling businesses.

Alternatively, in places where pennies are no longer used (like Canada, New Zealand and Australia), businesses round the final total up or down to the nearest nickel. The U.S. doesn't currently have an official policy, but as the penny is phased out, it may adopt a similar approach.

How Citizens is supporting customers during the penny phase-out

The penny isn't going to disappear right away, especially with billions of them still in circulation. However, the penny shortage is likely to persist since demand exceeds supply. At Citizens, we're committed to a smooth transition as everyone navigates this currency change.

If you have extra pennies, feel free to bring them to your nearest Citizens branch. We'll continue accepting them for deposit, or you can exchange them for larger denominations.

We're also closely monitoring the national coin inventory and working with the Federal Reserve to help manage the supply. In some areas, pennies may be limited or unavailable due to unfulfilled penny orders.

How you can help during the penny shortage

If you have any spare pennies, consider bringing them to your nearest branch to help keep them in circulation. We'll exchange them for larger denominations and distribute them to businesses and other organizations that need them to make change. You might not think your pennies will make a difference, but the more people who bring them in, the more we'll have to help meet the demand. Every contribution helps.

Also, consider using electronic payments when possible. The less change businesses need to make, the more pennies they will have on hand. Debit, credit card and digital wallet payments are secure and often more convenient than paying with cash. Modern payment systems use encryption, fraud monitoring and other security protections that make them a reliable option.

Be sure to watch for updates on coin availability. We'll share updates on our website and social media accounts whenever pennies are available.

Penny discontinuation FAQs

Here are some common questions about the penny phaseout to help you understand what to expect and how to move forward.

Will my pennies still be accepted as legal tender?

Yes, existing pennies remain legal tender and can be used for purchases or deposited at your bank.

Can I still get pennies from the bank?

In some areas, penny distribution may be limited or unavailable as inventories shrink.

What should I do with my spare pennies?

Bring pennies to your local branch to deposit or exchange to help keep coins in circulation.

Will prices be rounded up or down without pennies?

Retailers determine their own pricing policies. Legislation may also affect price rounding decisions. The phaseout of pennies may affect cash transactions, but digital payments won't be directly impacted by this change.

Looking ahead at the penny shortage

The phaseout of the penny isn't just a small change. It's the close of a chapter in U.S. currency history and a sign of how everyday transactions are evolving.

At Citizens, we're here to help you navigate this transition with confidence. If you have questions about how this affects your accounts or cash transactions, visit your local branch or contact us for assistance at any time.