Americans have been fairly resistant to the introduction of a coin form of our dollar currency. We have them in circulation, of course: The Presidential Series and the Sacagawea gold coins are both currently being minted. 
You can also occasionally bump into a Susan B. Anthony silver dollar or, if you're really lucky, an Eisenhower Dollar. (For some reason, it seems like this rare sighting almost always occurs in small-town gas stations and grocery stores. Don't ask me why.)
Despite several attempts to introduce a popular dollar coin, the dollar bill continues to enjoy its position as the dominant $1 currency.
Since traveling overseas, I've realized the story is a little different elsewhere. Both New Zealand and Australia have not only $1 coins, but $2 coins as well. And the dollar bill? Well it's non-existent. The smallest paper note is the $5 bill.
Coins are just dying to be spent
At first, the difference seemed negligible. Who cares if it's a coin, a paper bill, or a credit card? Ignoring exchange rates, a dollar should be spent the same regardless of material, right?
Sounds good in theory (at least in my head), but after several months of purchasing tram tickets, bottles of water, and Mrs Higgins cookies with small bills and coins, I noticed a difference. Magically, it seemed like I had a much easier time spending a handful of coins than I did a small wad of bills.
In the States, Courtney and I generally ignored change altogether. In fact, when we had something like a $3.79 charge, we'd simply record it as $4 spent to help simplify our tracking. This meant that in rare cases where we paid for a small purchase with only pocket change, we usually didn't track it at all.
However, we found the system we'd grown accustomed to in the States was a little more expensive to operate overseas. A small handful of change could easily be six or seven bucks!
Ditching the penny once and for all
The Australian and New Zealand currencies are also void of any pennies (although the New Zealand ten-cent piece looks like a penny). Electronic payments, including credit and debit, and still processed down to the penny in most cases; however, when paying in cash, they round the transaction to the nearest $.05 (or $.10 in New Zealand).
It wasn't until experiencing a penniless system that I realized how pointless (and annoying) the one-cent coin can be. Ironically, a 2008 New Yorker article points out that “primarily because zinc…has soared in value, producing a penny now costs about 1.7 cents.” Yikes!
You don't have to travel across an ocean to realize that fighting to keep the penny in circulation is a losing battle. And in my opinion, the widely-popular dollar bill won't outlast the penny very long at all.
And you know awhat? Although Courtney and I found ourselves much more willing to splurge with the increased coinage, I still favor the system from a usability standpoint. The question left to ask is:
Why are we fighting so hard to resist this change?
It seems like a logical shift. I don't get it! Are you ready to ditch the dollar bill and the penny?
Sacagawea coin photo by flower beauty.
To me, the most logical choice is to print or coin whatever option is cheapest to the federal government. A penny, for example, costs more to produce than it is worth. Likewise, we should be coining money with the least expensive metals and printing with the least expensive paper and ink – supposing we are compromising strategies to combat counterfeiting – possible.
The best way to get people to use the dollar coins is to get rid of the dollar bills. The government has never been serious about the dollar coin.
They seem to mint them in a relativity small number, so people collect them, and they keep the bills around, so people don’t need to spend them. One ends up reinforcing the other. Most people don’t see them very often, so when they do get one they hang onto it because it feels rare.
The net result is that the coins just sit around in piggy banks because people thing they aren’t worth spending. Start minting enough coins and stop minting the bills and things will change very quickly.
Ditching pennies is a good idea. They’re annoying. But change in general is annoying. It’s heavy, and makes noise if you’re carrying any reasonable amount. Why would we WANT to switch to dollar *coins*?
Other than durability, there isn’t any good reason I can think of. I would much rather carry a handful of dollar bills, than a handful of dollar coins. The bills are lighter, and quieter.
As for spending, I tend to only spend nickles and pennies. Anything larger gets deposited into a coin jar, then when full, is converted to paper money, which is either saved, or spent on something out of the ordinary.
Ditch the penny, fine. But ditching paper money, such as the dollar bill, for coins is silly from a convenience point of view.
Here in Canada we switched to dollar coins around 1985 (if I remember properly, I was 5 then), and on to two dollar coins years later. At both those times people complained how heavy everything would be, how annoying they were, etc.
Honestly, no one mentions that anymore, and it’s true that you spend them more than bills. They become like quarters, basically non-money that you don’t notice.
As for the cost argument, I think coins are cheaper than bills in the long run because they don’t tear and get damaged.
The biggest draw-back is definitely strip clubs though and probably the best reason to keep low-currency bills.
The federal government has actually started pushing the $1 coin fairly heavily (even shipping them in large lots free of shipping charges to individuals and businesses), in order to facilitate the “phase out” of the bill. This is because a coin can stay in useful circulation for 30 years or more, while a bill’s useful lifecycle averages around 9 months (+-). Obviously, this saves funds for the government that can otherwise be spent on other frivolous pursuits. Sorry, no politics. Anyway, they just need to quit issuing the bills if they want to get rid of them, because there’s an obvious aversion to change (no pun intended).
Lose the dollar bill and every coin except the quarter and dollar. We would have two coins. The dollar coin should have Lincoln and keep Washington on the quarter.
I am all for ditching pennies, but I like dollar bills. Coins are much more cumbersome to carry.
-Dan Malone-
I’d argue that it’s exactly for the inconvenience that we should replace the dollar bill with a coin. Coins, as Brenda notes, are heavy and noisy – and thus less likely to be carried and carelessly spent.
I never start the day with change (see above re: heavy and noisy), so automatically any dollar coins I received during the day would go into my “roll it and save it” dish.
Money we don’t carry is money we don’t spend. How many crucial, essential purchases are made for less than $5?
The penny is a relic and definitely should be ditched. If the feds were to continue minting them, they should be made of recycled aluminum – as should nickels and dimes. It’s ridiculous to spend more than the face value on creating money.
I think most people have avoided the dollar coins not because they are inconvenient or because they appear rare and collectible, but because ours are nearly the same size as a quarter and thus easily confused. At least the “gold” ones are a different color, a little thicker, and have a smooth edge – but that’s probably not a sufficient difference for our ageing, unobservant, and terminally distracted population.
The reason they don’t have dollar bills in New Zealand and Australia is because the government got rid of them, not because the people chose coins over bills. If the U.S. government wants a one dollar coin to be successful they will have to stop making dollar bills.
It is time to stop making the penny as well.
BUY low, SELL high.
I’m betting the dollar will come back up in the future, for instance I may invest here: DRR (double short Euro).
Couldn’t agree more.
With a little help from Google, I found that we produce about 13 billion pennies a year. First of all, why do we still need to be making pennies. Don’t we all have enough of them?
Second, that’s a lot of money being wasted.
My husband and I are on a cash only spending basis, Dave Ramsey style. I would HATE carrying around dollar coins instead of bills. I already dislike carrying a purse, instead putting cash into my pocket if I’m wearing jeans. But to carry around a bunch of one dollar coins? I’d have to deal, as I refuse to go back to my debit card. But I’d be dragged into using dollar coins kicking and screaming.
i am whole heartedly in favor of dumping the penny and introducing the $1 coin (and maybe $2 coin). i never have many anyways (dont carry much cash).
would be much easier to make vending machine purchases with a $1 coin (ever tried to insert a crumpled $1 bill?)
Some Canadian cousins of mine consider the $1 and $2 coins to be “change” and let me know they didn’t need to be reimbursed when I borrowed some from them. Further, they said that when they took their “change” jar to the bank, they had over $1700 CDN!
I’m a Canadian citizen, permanent resident of the U.S. Canada uses also uses $1 and $2 coins. I much prefer the coin system. I also “ignore” change. It either gets tossed in the bottom of my purse or in the coin jar (vacation fund) if I used my pockets, instead of purse and that includes the $1 and $2 stuff whenever I am “back home”.
Bonus: Whenever my daughter needed a dollar or two for some fundraiser or another at school, all I had to do was reach in the bottom of my bag and grab a handful of change – and would be guaranteed to find usually at minimum around $30 of “bonus” money. :-) Sometimes upwards of $60 or $70.
I hadn’t even thought about getting rid of pennies – it doesn’t matter to me either way, since they usually just go to the change jar, then get rolled and cashed in anyway. When you purchase something in odd ‘cents’, does the company round up or down? Have you kept track of how much you’ve ‘saved’ or ‘lost’ in this regard?
Two things that have not been covered by other commenters: inertia (is there any need to go any deeper into this point?) and compatibility. There have to be devices that read and hold this currency: specifically vending machines and cash registers. Most vending machines (outside of the USPS ones) can’t take anything more than a quarter and cash drawers really need an extra slot for the “special” coin (or coins if we move to a $1/$2 coin system)
Personally, Im with most of the other commenters though…coins are a pain to carry and I’d rather keep the bills around.
“A $5 bill saved is a $5 bill earned”
Interesting. In Japan they have a 500 yen coin, which is now worth $6!
But I think paper currency will disappear and be replaced with debit cards. And these debit cards will be integrated into all kinds of things, like keychains and cell phones.
I’m Canadian and we’ve had $1 and $2 coins since I was tween/teen. Frankly, I cannot even remember life with dollar bills. I do remember all the hemming and hawing when the government announced that it would phase out bills. And really, it doesn’t make a difference.
How likely are you to keep $5 in dollar bills in your wallet? Having $5 in paper bills is just as much a nuissance as it is in 3 or 5 coins.
Actually, since American money is all the same colour, coins will make it easy to differentiate denominations. No more accidentally paying for something with a $20 bill and getting lots of unnecessary change!
1. It’s not the same color; the dollar is green, $5 is purple, $10 is yellow, $20 is light green, $50 is red, and $100 is blue.
2. It’s not just as much of a nuisance, the coins are way more of a nuisance than the bills. Not sure how you came to that conclusion.
3. I don’t know who accidentally pays for something with an incorrect bill, never seen that happen before.
I was about one week into a two week stay in France before I encountered a (euro) penny or nickel –Â and loved it. Combine that with the fact that prices usually (always?) include tax, you end up with sensible, rounded prices rather than the all-too-common .99 nonsense. (Seriously, does that actually fool people into thinking that the price is lower than it really is?) I would gladly nix pennies.
As for dollar coins vs. bills, I lean a little bit towards coins but don’t really care much one way or the other. If it’s cheaper in the long run to use $1 coins instead of bills, great, let’s use coins. That said, I’m not a big fan of the current $1 coin design –Â it’s too hard to distinguish from a quarter at a glance.
When I travel I often end up with $20 or more worth of coins in my pocket. Especially when traveling in a Euro country, where the 2 Euro coin is worth almost $3 USD.
I have tried to promote the dollar coin (buying them via the direct ship program previously mentioned) and usually I get one of two responses: Either they treat it as something special (once a person behind me in line at a store bought the coins out of the register), or they get mad at me (I have a close friend that not only refuses to take the coins as payment from me, but *every time* I have to give him money preemptively stipulates that it can’t be dollar coins.) More than once someone has fumbled with a handful of coins and dropped them under a counter or even down a sewer grate.
I have since given up on promoting the coin. If the US government wants to make people use them, the one and only way to do so is to stop printing dollar bills.
At this point they might be better off jumping right to $5 coins at the same time. It’s going to happen sooner or later (assuming they intend to keep inflation going.)
The reason for this seems to be the same as the reason we’ve never adopted the metric system. Logically it makes perfect sense, but there’s this “because that’s what we’ve always done” emotional attachment to it which people cannot seem to overcome.
I think we’re more likely to see changes to currency come about because of the prevalence of electronic transactions. In a generation or two people will find cash as archaic as paper checks are starting to become today.
@16: JakeIL7
Compatibility is why all the current dollar coins are he same size and weight as the Susan B. Anthony dollar, so machines that used to take them would also take the new ones. I’ve found a lot of newer vending machines will take dollar coins, but ‘a lot’ is still maybe 30%.
What timing! I just got back from the vending machine where I was wondering why the darn thing doesn’t take dollar coins. I am a heavy user of dollar coins, as I find them a convenient way to make sure I always have cash handy for the parking garage machines. I am always complaining that the DC coin-meter parking doesn’t take them, though the cost is $2/hour. It only takes one two-hour meeting to realize that two $1 coins are more convenient to carry than 16 quarters! I concur that the adoption problem has more to do with the limited places they are accepted and the abundance of the $1 bill than anything else.
-Dollar Bill Cheerleader
Its not your dollars you have to worry about… its your pennies…
I dont care what anyone says, a penny is a penny… if i have to pay someone 5 cents for a 3 cent purchase, i lose out on 2 cents… you add 2 cents to everything you purchase and you start talking dollars you are losing out on…
all you people who follow this site should know a penny saved really is a penny earned…
There are times when I find coins much easier to use than bills. For example, my alma mater’s parking garage machines have a terrible time handling even the newest, smoothest $1 bills — I once spent seven minutes trying to exit the garage because the machine refused ever single one of the ten dollar bills I had with me. In order to avoid a repeat of that experience, I went to my bank and got rolls of quarters. The machines haven’t been a problem since.
Another interesting point is that Australia (and fairly sure NZ as well), we don’t actually have paper money, its all made out of a type of polymer. Means it lasts alot longer, better security against forgery (fancy clear panels and other features), and brighter colours ($5 = purple, $10 = blue, $20 = redish, $50 = yellow, $100 = green)
andyg8180: The beauty is that it cuts both ways. Over a long period of time, the times when you add 2 cents to a purchase or when a merchant adds 2 cents to your change will probably even out. In fact, you could probably adjust your purchasing habits to preferentially get those extra 2 cents of change, thus allowing you as a crafty consumer to earn many free pennies. :)
I’d gladly do away with pennies AND paper dollar bills. I hate having a wad of singles because not only is it visually misleading (oh wow, a stack of money in my pocket! oh, it’s only $8 *sigh*) but they make my wallet too fat and literally a pain to sit on.
And pennies…they’re only good for saving and changing in at the bank when you run out of space to store them.
I’m baffled by all the people saying that .25, $1, $2 are just throw away monies that they don’t account for.
I agree the penny should be phased out, but if the dollar moved to a coin I wouldn’t want to value it any less or feel like I could give it away at no cost to myself. Negotiating with Euros took a little getting used to, but that didn’t mean I didn’t pay attention to my “small value” coins.
I’m totally for ditching pennies, but I much prefer dollar bills over dollar coins. Womens clothing generally doesn’t have pockets, and reasonable sized wallets don’t hold coins so any change I get just gets thrown into the bottom of my wallet and then dumped into a container until I take the whole thing somewhere to deposit into a bank account.
#12 Cassandra – My family is also on the Dave Ramsey kick! The one thing we could not do was carry cash. We found we actually spent more with cash, and could not figure out what we had done with our money once it was spent. We ended up going back to the debit card, and sure enough, our money lasted longer!
As many others have said, I am all for ditching the pennies, but I think the dollar bill still has its place.
I read somewhere that when the half penny was taken out of circulation it was worth about what a dime is today. I think rounding is a good idea, and if it would force gas stations to stop posting prices as 9/10 of 1c I would be even happier about it. How about we get rid of the penny and nickel and list everything to the closest tenth instead of hundredth. Many stocks already trade at partial pennies, though us in the real world never see them. The same happens with sales tax: it rounds off.
A friend of mine told me a story of her mother who hated dealing with decimals, so she would enter purchases in her register to the nearest dollar. When my friend found out she panicked, but she found that after well over a decade of this practice her mom was less than $10 off. You might lose 2c on this transaction, but you’ll make it up on the next one.
30 billion pennies for 300 million people: just give me a $1 tax credit for the pennies not being made and we’ll call it even on the year.
It’s hard to make a judgement about the money system without having tried another one.
As a Canadian I find the US bills far more annoying every time I travel south.
Bills take a lot of space in my wallet.
bills are more difficult to sort.
It’s easy to blindly grab a handful of change and find the $1 & $2 coins without looking. US Bills require visual check which means pulling out a wad of cash.
I tend to collect $1 bills which I visit the US, but coins are much easier to get rid of.
It does collect up in my coin jar much quicker and it’s a pleasant surprise when it is time to roll my coins.
When the Canadian Government introduce the $1 and $2 coins they made a clean cut. Stop producing the bills and they will be mostly gone in a month or two. Only sell the coins to banks and mandate that banks remove the bills they get from circulation.
Most vending machines are designed to allow swapping out the coin counting parts. It’s surprising how quickly they can upgrade machines when they want your money.
regarding the dollar bill to coin: I support it for a couple reasons, one being that it will be easier for the blind. The federal government has been resistant for years to changing our dollars to make it easier for blind people to use due to the expense involved, but I don’t think they took those people into account even when they redesigned the bills. I am not usually one out shouting for civil rights, but this seems a basic thing we should take into consideration as we redesign bills and so forth. The father of a friend of mine was blind and my friend tells me he had to worry about getting taken advantage of at every transaction because all of our bills are tactilely identical. A dollar coin is a step in the right direction for that.
And btw, if we remove the penny and nickel and replace them with a $1 and $2, it is the same number of types of coins in circulation.
andyg8180 – I’m glad someone else came out in favor of keeping the penny. Penny-pinching, lucky pennies, pennies for your thoughts, I wouldn’t mind keeping them around for the idioms alone, plus of course the truth in the idiom you cited.
Of course, it’s ridiculous that it costs more than a penny to make a penny, so I wouldn’t mind a redesign.
I’m in favor of dollar coins. I’m pretty frivilous with my dollar bills already (lotto tickets, vending machines, video game tokens and the like) so it doesn’t make much difference to me if they get caught up with the rest of the loose change.
This debate is hilarious for a Canadian like me! I find dollar coins to be much easier to handle for vending machines, coin operated laundry, paying transit fares, parking, etc. I’ve been using coins for decades and haven’t noticed any unusual fumbling or dropping down sewer grates. (Besides, if you do drop a dollar coin, it isn’t going to blow away like a bill!)
I guess it’s what you’re used to. I’m too young to remember much about the changeover from bills to coins, but I can’t imagine going back now.
Japan has everything from 1yen up to 500yen in coin form. The first bill is 1000Yen (which is like $10). I don’t hear anyone complain about change there and that can get pretty heavy, pretty quick in a society that treasures cash over plastic.
We don’t complain in Canada, either.
really, how hard is it for you to get rid of your near useless $1 bill? You can spend a buck easy: coffee, gum, snacks.. or you can save it.
IMO– moving to a $1 coin would increase savings in America dramatically. I typically don’t carry a lot of change in my pockets and it magically collects on the desk, my bookshelft, etc. Several times a month we gather up the change and are always suprised at how much there is.
When living overseas, I had this same habit. Over a 6 month period, I had over $100 in change on the table. America is definitely ready for a $1 coin!
I really thought this blog post would be about going paperless/coinless altogether and using strictly debit/credit. That’s what I do 99% of the time anyway.
I’d advocate what someone else said above and go with whatever $1 form is cheapest to produce. And ditch the friggin’ penny already, round everything to $0.05 and call it a day.
You know what’s funny? I had almost this exact same thought when I moved out of the country to Israel and then came back and visited the States after my first 11 months.
The first thing I noticed was how BIG American bills are – I never noticed it before because my wallet was made in America and accomodated the bills naturally. But coming back with my Israeli made wallet – I literally cannot fit the bills ($1 or any denomination for that matter) without actually folding it in half or in quarters. Very frustrating.
But back to the coins – we also don’t have pennies here in Israel and when I started recieving pennies in change during my visits, I thought to myself – what a waste! Here in Israel, the cashiers round up to the nearest .10 and if you have change less than .5, you don’t get your change – they just give you the rounded number. Hard to get used to at first, but then it just makes life a bit easier.
So, in essence – I’m all for getting rid of the pennies, unless at the end of everyday, you empty your pockets into a spare change holder and the roll them and deposit all of them into a savings account at the end of the week/month – and then and only then, will you learn to deal with them :)
As others have said, it’s not just a couple of countries that have coins for the equivalent of a dollar; it’s many countries, I would guess that it’s most of them.
Also I strongly agree with what someone else said; this will never change in the US until the government decides it is willing to put up with the whining and just start phasing out $1 bills altogether. A few years ago I read a comment from a Mint official saying that the reason they didn’t make many $1 coins was that there was so little “consumer demand.” What does that even mean? What do they expect people to do, start complaining when they don’t get coins? It’ll never happen. They need to have some political courage and just make the decision and go all the way.
Why not drop that digit altogether? The nickel is also far into the red to manufacture (and getting more so all the time), and I think people would prefer $1.1 or $100.3 (though it would look strange for a while) than deal in the fives.
Hi All
I’m a NZ’er and like Rachel (#24) we don’t have paper notes, we have the polymer ones. They go through the wash fine and last for ages. Those who mention that coins are heavy and a pain to carry around – well here in NZ there aren’t that many people that I know of that actually carry physical money (coins or notes). Debit and credit are the way the go – there are only the occasional times that I would need physical money and this is where there is a collection for the Cancer Society, Lifesavers, work raffles etc (usually keeping coins in my desk at work for such an occasion).
I don’t see any value or need for physical money when all our shops have eftpos anyhow. As long as you can’t go over your limit there shouldn’t be an issue.
So I hope the US gets rid of their pennies & dollar notes – they are really not needed in 2010!
@ ElvisKungFu :
I actually find it’s a bit of both. If I have a $2 coin in my pocket, there’s a good chance it’s going for a coffee or something useless. If I make it home it goes in a jar, which when I counted last month had about $150 in it.
Like anything else money-related, it’s all about discipline. Money’s still money regardless of the shape.
Being Canadian and having lived in Japan (which others have mentioned is almost entirely cash-based and who have a much wider variety of coins), at the end of the day it doesn’t matter. People don’t like to change their habits, but you’ll get used to anything.
Personally I’m looking forward to the Iris-scan debit system.
I live where it’s expensive to ship pennies…we don’t use them.
I don’t miss them and sort of get annoyed when I get handed a penny as change in the States (it averages out…round up, round down…pay by debit most of the time)
Even though Euro 1 and 2 cent coins are worth more than that in dollars they are equally annoying and I would not mind seeing them go away either. Even the 5 cent coin seems to accumulate in piles around my house.
I lived in the UK for five years – they have no 1 pound notes, although they do have 1 pound coins. Nobody mentions that the pounds are heavy/etc. because, really, it’s so easy to spend them. Multiple dollar bills annoy me as much as multiple pound coins, because both are bulky.
When it comes to vending machines, coins work substantially better than bills. I never had a vending machine reject a pound coin – they reject dollar bills all the time, however, because one is a little torn/folded/not crisp enough.
The UK does have pennies but I could get behind a system that got rid of them and rounded to the nearest nickel.
I think complaining that the penny costs more than a penny to make is a straw man argument. When minting the penny, you are worried about the utility and durability of the coin itself, not the face value. A penny is spent thousands of times over the course of it’s 30 year avg lifetime and the long life span is what is important.
Think of it this way. If we could make the penny for .9 cents, but it only lasted 5 years, would that make you happy? It shouldn’t.
Or, if the raw materials of a dime (a thinner, smaller coin) cost more than that of a penny, but less than 10 cents, is that ok? No!
Pennies could be made of aluminum or steel, like they have in the past. It may be cheaper, but if it is not less than a cent, is it a no-go?
I’m all for making the minting costs cheaper, but while banging the “A penny costs more than a penny to make” drum may get attention, the argument doesn’t stand up to scrutiny.
I really don’t care either way what they do with coins. I almost exclusively use debit or credit cards. I can’t remember the last time I purchased something with cash.
I personally love the dollar coins. The couple of years I spent living in Toronto got me used to the idea.
I love them for the same reason Adam Baker doesn’t. As an American, I don’t think of change as real money, so when I empty that pocket full of change into my jar every night, instead of saving 32 cents I was saving 7 or 8 dollars!
I almost had a heart attack when I took my jar to the bank and it had almost 300 dollars in it ;D
Are you ready to ditch the dollar bill and the penny?
Pennies – YES
Dollar – NO
Here’s why:
As you already stated, the penny costs more to make than it’s worth. They have lost their “value” a long time ago. If I was to take a poll, I wonder what percentage of people would stop to pick up a penny on the ground vs. a nickel, dime or quarter.
I think converting the dollar bill is a bad idea because psychologically we have devalued coins. We say things like “chump change” and “keep the change” sometimes implying the amount is trivial or insignificant. Dollar coins will probably prove counter-productive to saving.
Also, carrying a few dollar bills comes in handy for smaller tips and spontaneous giving such as a couple bucks for the shampoo girl, or a few dollars for the bagger at the grocery store. Personally, I’m less likely to carry dollar coins.
Kita
Coins of a dollar are not convenient to use. Paper dollars will be around a long time.
John DeFlumeri Jr
@20 carrythebanner:
“… the all-too-common .99 nonsense. (Seriously, does that actually fool people into thinking that the price is lower than it really is?)”
Yes it does. Research has shown that people only ‘see’ the first one or two digits of a price. So something that is $16.99 is more appealing than something that’s $17. It gets big when you’re looking at larger purchases, there’s a reason you find houses and cars at prices like $49,950 and $199,500.
As someone who’s lived with dollar, pound and euro coins over the past 20 years I find these protests amusing. Yes, they’re heavier. But you know? You never find one shredded in the corner of your wallet. Also, you do forget about them, more than with bills, so when you finally upend your wallet and go through your change you make the happy discovery that you’ve got $20 in $2 coins.
But really it just comes down to inertia. People hate change (pardon the pun). You’ll moan about it now but in a couple of months you’ll be over it and wonder what the fuss was.
Re the rounding of prices to the nearest 5c – yeah, it’s annoying. But it all works out. If you want to be clever you can start getting $20.02 worth of petrol every time. Or, depending on the way it would round, use a debit card sometimes. I’m not anti-card so almost all my purchases are charged the exact amount.
I have to agree that the dollar coins are not convenient. Here in Costa Rica they use tons of coinage and the biggest bill is a 10,000 colone, which is about 20 bucks now. The problem with all the change is that in all honesty it makes your pants fall down! The coins are really heavy.
I noticed when I traveled to Belize for this Christmas vacation that they used dollar coins rather than a bill. The lowest bill I saw was a five, everyone gave change in dollar coins. I was interested by that fact and this post reminded me of it. I agree, get rid of pennies, and I would be ok with dollars too. It would be nice to see a $2 coin if they did that though.
I’ve been collecting “street money” for more than a decade, and you can really tell when there’s a recession — people do pay more attention and pick up even the pennies!
One of the reasons that the US keeps minting pennies is that people won’t/don’t carry them around — if all the pennies sitting in piggy banks and under couch cushions went back into circulation there would be enough to not have to mint for a while, but since a lot of people don’t use their change, retailers always need more.
My dear husband is like that — no matter what the cost, he hands over some bills and takes the change.
I’d be fine with a canadian-like switch to $1.00 and $2.00 dollar coins — or even a real return to using $2.00 bills — I think the only place they are in use right now is at Monticello. But retailers would complain because register drawers aren’t set up to take things — even the 50cent piece disappeared because retailers weren’t joining in with the circulation of them.
I’m all in favor of getting rid of pennies. There’s too many out there as it is. I lean towards keeping the dollar bill because I don’t like to keep coins around. But I must admit that with dollar coins, my change jar would add up to a lot more quickly!
Didn’t read all the comments before posting this, but I agree. The US needs to mint a $1 coin akin to the 1 pound coin in the UK, which is a small but very dense coin that gives a good feel in the palm of one’s hand.
DO NOT DO AWAY WITH DOLLAR BILLS!! I manage a bank and run a teller drawer too and HATE HATE HATE the stupid dollar coins and $2 bills! They are the worst. I like the idea of getting rid of pennies though. They are pretty pointless. Can you imagine all the frugal people freaking out about rounding up from 6 cents to 10 cents though? lol
I was going to make the same point NZChick made – here in N.Z. there’s a much greater reliance on EFTPOS (http://en.wikipedia.org/wiki/Eftpos) primarily using debit, but sometimes credit cards, even for routine, minor transactions at small stores. Indeed, even vending machines and parking meters are starting to use text messaging systems where you dial a number and money is deducted from your phone account.
N.Z. is small, though, and these things can be tried without too much hassle here. The most recent change happened a few years ago when rather large, heavy coins were withdrawn from circulation and replaced with smaller, lighter versions.
I wouldn’t miss the penny, but I prefer the dollar bill for reasons covered above. One reason I’ve disliked the dollar coins is because they are too small and can easily be confused for quarters. I think they need to be as large as half dollars – which come to think of it, have never seemed very popular either. But their scarcity makes you take notice of them; you won’t mistake one for a quarter.
Cash in general is inconvenient. Not sure why people use it regularly.
The customers at small town convinence stores spending strange currency are often strapped for cash and spend their “collectible” coins– i.e., somebody bought them as a gift.
Hey!
Get rid of the $1 bill … having lived in the UK for years and traveled to the EU regularly while living there (not back in the USA), I can tell you that £1 & £2 coins are great. Easy to use in vending machines (and the self-serve line at stores), easy to count (done by weight in the UK), and are no more of a hassle than having to get $19 in $1s for change!
As far as the penny, couldn’t care if it went or it stayed!
Funny corollary:
As a Canadian who has moved to the US, I find myself always short of cash when I go to pay for things under $10. In Canada, a thick wad of bills means that I can cover a $7 purchase with the money in my wallet. In the US, I end up looking foolish when I just have a useless pile of dollar bills.
It makes me feel like I’m living in an absurd version of the past, like I’m forced to carry colonial scrip to buy a pack of gum. Down with the paper dollar!
Good article… I don’t see why we shouldn’t get rid of the dollar. I lived in the UK still when we abolished the one pound note and replaced it with the pound coin. Didn’t notice one single difference in spending it.
One thing I did notice, which may be better suited to this blog, is that it was MUCH EASIER TO SAVE one pound coins in my coin jar, because I didn’t want a pocket of change at the end of the day!
Perhaps Obama should think about abolishing the $1 note and just have coins, at least that way we might be able to save up enough money to cover our taxes we’ll have to pay back to cover all his outrageous spending right now!
Food for thought!
When visited Europe I also enjoyed using coins when I would otherwise use bills for purchases in the US.
And I disagree with the argument that coins are more cumbersome than bills… I’d much rather have 10 quarter-size $1 coins in my pocket than 10 5 year old wrinkly scraggly $1 bills that are hard to even fit neatly in your wallet. :)
-Matt
I just went through a completely absurd operation in Monterey, CA–I had to put my bills in a change machine to get dollar coins to put into a machine right next to it in order to get my little ticket for the parking lot. I can’t imagine what the point would be.
I used to live in Germany back before the Euro–everything up to DM 5 was a coin (well, IIRC there were a few 5-mark bills floating around, but they were rare and teeny). If I was buying a few items, I’d do the math while standing in line at the checkout and pay so I didn’t wind up with pockets full of coins (and the ones I did get were the ones I needed for the laundromat). Can’t do that here because they tack on the sales tax at the register so you don’t know what it’s going to be until it’s rung up (unless you can figure 8 1/4 percent in your head), so my purse always gets weighed down with pennies and nickels when I do cash transactions.
Every month I get 200 one dollar bills to spread out for my monthly misc. cash budget (done by the week). I would hate to think about lugging 200 one dollar coins out of the bank every month and they would be cumbersome to store. Right now I file my cash away in weekly divisions. Also, the penny is great for me! I never spend change and each week and half I have a new roll of pennies to deposit into my savings account. That is fifty more cents than I had before!
One of the greatest parts to being in OZ and NZ was not dealing with pennies. I loved the rounding factor and the difference was unnoticeable. I really wish the US would rid itself of pennies.
Good article Adam
David Damron
Lifeexcursion
That would completely change the atmosphere and costumes of gentlemen and ladies clubs. I guess they could put a wishing well on the stage.
A dollar coin would be great. I lived in Great Britain for awhile, and didn’t have any trouble with the Pound coin. For one thing, it’s much better in a vending machine than a bill.
It would also be useful for all of our different bills to be different colors. But let’s face it, Americans are stubbornly parochial when it comes to such changes. Somehow, people think it’s “un-American” for bills to be red or blue or to phase out the dollar bill. The only way to get rid of dollar bills is to take them out of circulation entirely, and when that happens listen for the cries of consternation and dismay!
More coins…. yuck. But, since we’re going plastic anyway, why not add another coin.
You’re kidding? You still have a one cent coin in the US? We ditched ours nearly 20 years ago!!! We round everything up or down to the nearest 5c if you pay cash, but not EFTPOS. I have the impression (which could be wrong) that in Australia we rely less on Credit Cards and more on Debit cards (money coming straight out of the bank) than in the US. I did a calculation once that if I paid for everything to be rounded down in cash, and everything rounded up by card, I’d probably only save $3 in a year!
I personally disagree that $1 and $2 coins are easier to spend than notes, mainly because they are gold, whereas 5c, 10c, 20c, 50c are silver. I find a $5 easier to spend than a $2, maybe because it is the smallest denomination of notes and therefore the equivalent of a silver coin?
I guess because the dollar isnt worth a dollar anymore that it would make sense to be done with it and that of the penny. i for one dont have a problem using pennies or a dollar. still remember when i could actually buy a slice of pizza for a dollar. maybe if it werent for inflation the penny and 1 dollar would still have relevance. i guess since our money is fiat given money supply must continue to expand in order to finance intrest debt interest payments on the debt by which it is issued.
Another Canadian here who thinks the loonie and toonie are great. I usually remember to go into my coin purse to pay for small purchases, but sometimes I forget, then open up the purse to find I’ve got $12 or more in there. Found money!
And as someone else mentioned above, if I have a bunch of bills (nicely colour-coded) in my wallet, I have a good idea of what I can afford. I’m actually less likely to spend coins, and this means I put a conscious brake on the spending of bills.
I love the States, and I love Americans, but man, do I hate your one dollar bills. The one visit I ever made to Atlantic City, I decided that any stupid, bulky one dollar bills I still had in my wallet on the last day would actually be used to gamble with. I was never so happy to lose money in my entire life :-)
I’ve lived in Japan (via the US) for about four months now. Some people have already mentioned a few things about it, but I love their cash system compared with the US. Yeah, the coins add up really fast, but that’s also great for saving. In fact, in the four months I’ve lived here, the change jar that I started on the first week I lived here already totals around $120 (USD) last time I did a rough count (which was a while ago, honestly; it’s probably increased at least 50% since then). Not bad for something most people consider disposable.
But I’m also willing to acknowledge that the cultures are different. Many people get around by bike and public transportation in Japan. As a result of that, many people, even men (including me), carry bags to lug things around, meaning we’re stuffing change in the bags rather than in our pockets, which makes it a lot less of a hassle to carry around and use. Given that the change here is more useful in a normal persons everyday life (transportation, vending machines, ramen restaurants, etc), and we’re carrying it around in a more efficient way, it works really well for the culture.
As long as the US can increase the usefulness of larger coins in more aspects of life (and maybe also when people get over the taboo of men carrying a bag ;)), it should work well for them, too. Plus, if it’s less expensive to produce, why the hell not?
‘I lived in the UK for five years – they have no 1 pound notes, although they do have 1 pound coins.’
Actually £1 notes are still around (albeit in greatly reduced quantities). You occasionally see them in your change when a shop cashier doesn’t like you…
I have to say that I’m mortified by all the people who say that they throw out money/count $1 coins as useless! If nothing else, can’t you bank them and earn a {very?} little interest?
The information about the cost of producing a penny isn’t accurate anymore… Check out:
http://www.coinflation.com/
Currently, the metal value of a zinc penny is $0.0069.
On the other hand, the metal value of a nickle is more than five cents…
I don’t care whether we have pennies or nor, or whether we have coin or paper dollar bills. Money is money. What matters is what the prices are and what the merchants accept. If something costs 1.01, I need a penny. If the soda machine only takes dollar bills or quarters, I need a dollar bill or some quarters.
Coins are heavy, noisy and seem to spend a lot easier than paper money. I hate using dollar coins for that reason and I hope we never switch totally.
One time, someone paid my dad in all Susan B. Anthony dollars (~$30). He put them in his coat pocket and forgot about them. Later, he went to buy something and thought they were quarters and spent them all on fast food. Money that all looks and feels the same is easy to confuse and throw away needlessly.
I think any change just takes time getting used to it.
We lived in Europe for about 5 years before the Euro was instituted. My husband was Regional Manager for the Mediterranean Region for his company, but we lived in Germany near the Dutch border. You should have seen our filing system for 15 or so types of currency (each country had their own). When the Euro was introduced, it was a huge relief for us (no more losing money in transaction fees every time you crossed a border!)But was funny to us was that so many were against the Euro! I can’t imagine that anyone would want to go back to those times.
I think it could be said that there will be a period of transition, but after everyone would learn the new system ($1-$2 coins, for ex)people would like it.
The point about the blind that someone mentioned isn’t a small one. I think that every other currency takes the blind into consideration, except the US.
Ditch the penny and the dollar bill! Pennies are already ridiculous. I don’t use them. When I get them in change, I either dump them in the “take a penny” cup or they go home to live in my change jar until they get traded in on something useful. And dollar bills are fragile and take up too much space. I’d much rather use dollar coins that I can rely on a machine to accept the first time than a crumbly old dollar I’ll have to try and feed in five times before I get it flat enough for the scanner to read.
There is a slight adjustment to be made, though, I admit. Very slight, about two days. When I’m in the UK, my first grab is always for my wallet to pay for something with a bill. Then I get fretful because I’m running out of cash, only to go home and find £10 in my pocket from the change I’ve gotten. It’s much more fun to find £10 than it is $1.82! Pound coins are easily distinguished from all the rest from their heft, it’s very easy to use them, it just takes me a few days to remember. :)
And, Canadian dollar coins have clever nicknames! None of our coins have monikers. I want a loonie and a toonie! A friend of mine campaigned to call the Sacajawea dollars “sackies,” but I don’t think it caught on. ;)
@54 Not My Mother:
Thanks, I probably should have assumed there was an unfortunate answer to that question.
Being mathematically inclined, I always round $3.99 up to $4 in my head (to figure out tax/tip, track spending, etc.) so the one-penny-less thing always seemed trivial and petty to me. And don’t get me started on the 9/10 cent trick they use at the gas station …
It’s amazing that some people still believe the same old myths about dollar coins. Gosh, did anyone believe in 1970 that having a 25¢ bill would be a good idea? “Wow, those quarters are so heavy, we should have a bill worth 25¢!” Sounds absurd, doesn’t it? The dollar in 2010 is worth less than a quarter from 1970, so why are we still using a bill with such little value?
Coins are more convenient and faster for small purchases. Every other industrialized country in the world has figured this out and are enjoying more convenience and saving money. Why can’t we figure this out in the US?
If we eliminated the penny and dollar bill, people would have _less_ weight in their pockets, not more. This is because people would be more likely to _spend_ their change, not hoard it.
Just get rid of the dollar bill and people will realize how convenient dollar coins are.
Paul
Get rid of pennies, fine. But a dollar coin!?!?! Coins are annoying, heavy, awkward in a wallet and expensive. Just because other people are doing it doesn’t mean it’s smart…
@andyg8180:
“I dont care what anyone says, a penny is a penny… if i have to pay someone 5 cents for a 3 cent purchase, i lose out on 2 cents… you add 2 cents to everything you purchase and you start talking dollars you are losing out on…”
You make a lot of 3-cent purchases, do you Andy?
Let’s get real. We’re not talking about 3-cent purchases here. We’re talking about $54.93 purchases. In this case, yes, it would round up to $54.95, and you’d pay 2 cents extra. That represents an increase of 0.04%. Are you really worried about the price of things increasing by 4 100th’s of a percent? Inflation will do that anyway in about a week (assuming 2.5% per year).
@Hrun:
“The beauty is that it cuts both ways. Over a long period of time, the times when you add 2 cents to a purchase or when a merchant adds 2 cents to your change will probably even out.”
In theory, that’s correct. However, that assumes that the merchants will not change their prices at all.
In reality, when presented with an opportunity to increase profits, the businesses will take it. For example, any items that (after taxes) total up to an amount that would round up to the nearest nickel, they’d leave alone. Any items that would round down, however, they’d raise the price by 2 cents. Voila – now they round up, too. The customers won’t even notice, but it’s a nice little extra profit for businesses.
I researched dollar coins for a public speaking class I took in college 10 years ago. I wish I still had that report because I remember the pros outweighed the cons by a huge margin. I would love to switch to coins because dollar bills are always so messed up they don’t work in vending machines. And that’s probably the only time I use cash. Unfortunately a decade later we’re no closer to switching.
Please let’s get rid of pennies. Nickels are pretty much a pain as well. I’m with those advocating cost effectiveness. If the dollar bill is a better value in terms of circulation and cost to manufacture, then keep it; if not, go for the coin. In Hong Kong, they have a $5 coin, and i found it easier to deal from one pocket most of the day than switching back and forth between bills and coins for every transaction.
There are some practical reasons to go with heavier (and more expensive) coins – vending machines have trouble sorting lighter coins, tho’ that’s probably not a permanent obstacle.
I stopped scrolling thru comments after awhile… anybody mention the fact that US bills are virtually unusable by the blind? Not only would $1 coins help, but we should convert to paper (or polymer) bills that are different sizes and colors to make it easier for people of varying abilities to be able to use the money!
@Jeff:
“I think complaining that the penny costs more than a penny to make is a straw man argument. When minting the penny, you are worried about the utility and durability of the coin itself, not the face value.”
You’re forgetting about the secondary metal market.
If the inherent value of the raw materials in a penny are worth more than the penny as a currency, then what’s to stop people from buying $50,000 worth of pennies from a bank, melting it down into its constituent raw metal components, and selling the copper to a scrap dealer for $60,000? It’d be a pretty easy way to make $10,000. For the record, copper has been getting more and more valuable in recent years.
What do you suppose might happen to the Treasury if large numbers of people started figuring out they could profit in this way?
It’s crucial that all currency have more value as currency than as raw materials.
Get rid of nickels too!
Thanks, Kevin for comments 88 and 89, that’s exactly what I was going to say.
@ MaryL — I used to love American tourists for the opposite reason. Many couldn’t be bothered taking their Canadian coins home, so they would leave them as tips for us housekeepers!
@Nathan #87 “Just because other people are doing it doesn’t mean it’s smart…” I agree — sort of. Just because a lot of people are doing something doesn’t mean it’s a bad idea either.
@Chickybeth: “Money that all looks and feels the same is easy to confuse and throw away needlessly.” That comment made me smile because all American bills look alike to me. Is that why so many people in the States overspend — because their one dollar bills look and feel the same as their $100 dollar bills? ;)
Ditching the dollar bill would be the equivalent of stop using plastic to pay for things. Dollar bills are just more convenient to carry than coins, just like plastic is much more convenient that bills. Americans like convenience… and we’re willing to pay for it.
At least that’s my opinion….
Dump the penny, dump the dollar bill. You have to do both at once so that cash drawers will still have enough change slots.
A scan of the 100 or so blogs show a vastly differed opinion as to if coin or paper is preferable: certainly everyone has their personal preference. The main issue with pennies is simle: if it takes 1.7 cents to produce a 1 cent coin, a claculator is not really necessary to determine if it makes sense. Additionally, in today’s economy, the 1 cent penny is virtually valueless. What we need is for the world to follow the path of the Euro: find a way to have a universally usuable currency that can be taken from one country to another. Anyone who has done any international travel can identify with this problem…
I love the $1 and $2 coins here in Canada, and I really wish we’d get rid of the penny as well. Nothing is as useless as a penny, it seems.
I doubt we can get rid of the penny until you guys in the States get rid of the penny. As far as I can tell, it mainly exists because of places lie WalMart that want to have the “lowest” price by setting it to $14.97 instead of $14.99 like their competitor. Lame!
Since I also tend to ignore change, the best part about $1 and $2 coins is that a handful of change usually ends up being $10+!
A few months ago, I collected all the loose change in our entire house (piles from the dresser, on the laundry, etc) and took it to a CoinStar machine and discovered it was over $100!
No, I don’t think this will change. It’s too annoying. When I was in europe it was so annoying carrying all loose change around.
As for the similarity between dollar coins and quarters in the U.S.:
Trust me…the current dollar coins are different enough that giving a dollar when you meant to give a quarter will happen to you once, maybe twice. But after that, you will learn and your brain will automatically sense the difference for you. If not, then you don’t care enough about how you spend your money to take notice.
Kevin @ 92
A few years ago a guy actually did this. After a while they stopped him by simply making it illegal. Effective in his case, but I don’t see how that fixes the issue in the long run.
John @ 80
The value of the raw materials will, of course, fluctuate with the market. But the cost of manufacturing a penny is only partially in the raw material. The 1.7c estimate is, i believe, for labor and facilities as well as raw material. I’m sure that number is obsolete, but probably not terribly far off.
There’s a law of economics called “Gresham’s law” that states “bad money drives out good.” Basically it means people hoard good money and circulate bad money. It meant a lot more when our money was gold and government declared all coins had equal value. When people had the option to circulate a chipped worn coin that contained less gold and a fresh new one that contained more gold they would hoard the fresh new one and circulate the bad one, thus driving out the new fresh one. It still applies though and it’s going to be a major barrier to introducing a nice pretty coin worth a dollar.
The penny isn’t going away because of who is on it: Abraham Lincoln.
Since he is regarded as the greatest president in America, any attempt at removing him could easily cost an elected official’s seat.
The same holds true for the dollar as well with George Washington, and the government is probably loathed to put his face on another coin (as he is on the quarter and 50 cent piece I think).
I don’t think pennies are worthless. For everyone who feels differently, send me your pennies and I will be a very happy guy! :)
I pick up every coin I see, including pennies. In high school, students would throw pennies at each other in the locker room throughout all the periods. When I had track practice after school, I would pick up all the pennies from the day, and I used them to buy lunch the next day.
Of course, I make a lot more money now, so a penny might seem less significant. But I never forget my roots and how much every penny meant to me when buying lunch the next day. And this was only 2001-2005, so the “value” of a penny wasn’t much higher back then.
The whole point of Get Rich Slowly is to do it one step at a time. Everyone is looking for the big win, but we mustn’t forget that a penny is a step towards wealth also.
@Kevin #92, http://www.getrichslowly.org/blog/?p=8158#comment-217196
It says the cost to make pennies is 1.7 cents. No one ever said the actual copper was worth more than the penny. And even if it was, would it be worth the cost to obtain massive amounts of pennies, melt them down, and sell them to a factory? Of course not.
I am not in favor of getting rid of the pennies. But the production must be slowed down. There are far too many businesses that insist on pricing things down to the penny and then come the taxes. It is a rare place in US where the price is in round numbers and the tax is included. What the business would lose in sticker shock would be gained in higher efficiency.
I think the Euro’s biggest faults (except for basing it on a base-10 number system) are the 1€ and 2€ coins, so don’t copy that idea. My wallet gets so heavy and full, bills are much better. I don’t say the coins should be abolished, but supplemented with 1€ and 2€ bills. Back when we had Schillings in Austria, we also had 20 ATS bills and coins, so why not (although the latter were quite rare)?
Pennies are easy to get rid of. Who really wants to keep pennies? I’m not rich but if I see a penny on the ground I won’t even bother picking it up.
I’m one of those weird people who goes the bank and withdraws rolls of dollar coins just so I can use them. I’d love to see dollar coins take the place of bills but until the feds pull bills from circulation nobody is going to use them.
It seems minor to most of us, but the vending machine industry would eventually benefit from a switchover. The mechanisms to process bills are much more difficult to maintain than the ones for coins.
There’s definitely a psychological element to all this. The dollar buys less and less each year. At some point it will effectively be pocket change. When do we give up associating the dollar with “real” money and begin to think of it as change. If fifty years ago a pack of gum cost 10 cents and now a pack of gum costs a dollar, then then buying gum is a pocket change transaction. How long do we wait before a dollar becomes worthless enough in our minds to be considered as change?
I am living in Germany. The smallest Euro bill is 5 Euros and although I never experienced it the other way around I think our system sucks!
I am all for ditching the pennies or cents here but
I would also love to see a 1 Euro bill!!!
The change is hard to track, its heavy, its not very convenient to handle when you have the stuff in your hands.
When I leave my apartment I usually clear my pockets of all the change, I only take 1 to 4 of the bigger coins with me (2,1 Euro and 50 cent coins). The rest I throw in a box which is so heavy you can only lift it with two hands. This box has been sitting there for years, everybody has such a box. I even know people that throw their smaller change away. Stupid x.99, x.95 prices are to blame.
All those penny graveyards, the copper could really be put to better use.
What exactly was the advantage of coins again?
I have spent big chunks of my life in England and Spain. At first, I realized that I was spending a ton more money in the Spanish system because coins are easier to spend, if you are used to coins being more insignificant amounts. Once you acclimate to the system, however, it seems preferable. There are even $5 coins in Spain as well, and, while I suppose technically they are heavier, I never noticed. In addition, they are sturdier…and as one reader stated, much easier to get into a soda machine! I agree with others that the penny needs to go, as well as the nickle…what a waste of government (read: our) money. I can see that it would be difficult to implement this “change” though…it’s very complex figuring out that you have to stop printing paper currency and start stamping coins ;)
I guess I will chime in on my aspect here. Time to cancel out of some of the “problems” I see mentioned here.
1. If the coins really are “so heavy” then you most likely will spend them first. You have to adapt and laziness is not an excuse!
2. Vending machines will quickly be converted to accept dollar coins if bill ceased to exist tomorrow. Otherwise vending businesses will soon be out of business.
3. Using coins saves our tax dollars wasted on paper notes.
4. The women’s clothing market will adjust with pockets. If the need is there the sellers will adjust.
5. Cash drawers: use the old $1 slots for the coins. Solved. Pretty lame excuse to begin with. Plastic trays are cheap to produce.
The problem now is people have a choice. If the mint announced that all $1 bill printing will cease tomorrow then you will see a flood of coins in the marketplace.
People may gripe for a while and that’s just too bad. 6 months later you won’t hear much about it. At some point you have to do what makes fiscal sense.
Pennies are worthless and should have been gone long ago. Waste of time, money, and space!
Finally if you are still insistent on not using coins then your change jar will be worth a lot more when you roll it and take it to the bank!
– Foo
We don’t have the time or money to let this come down to any simpler argument than what is the most efficient currency combination for bills and coins. If it’s cheaper to make dollar coins that last longer and replace pennies and nickels with 3.33 cent coins, whatever, we need to do it. At this point in time, arguing over “convenience” or “noise” or “something to put in a greeting card” has very little veritas compared with how to save the government (and therefore us) money.
I must be one of the rare people who actually spends pennies. I follow the envelope system and trust me, I spend my pennies. With my budget already pretty limited, I happily use those pennies to get a little more. I would also happily get rid of my pennies they weigh down the envelope, making me feel like I have more than I do
As for the dollar coin, I’m of two minds. I carry a pouch for the envelopes. The only part that doesn’t stay in the pouch (usually) is my laundry quarters. Recently I’ve had about $5 in quarters in my pouch because I keep forgetting to move them over to the cup with the laundry quarters. My pouch has a noticeable difference in weight (quite a bit heavier). Yet I find dollar bills to be cumbersome and frustrating when I pull out a wad of cash only to find that most of what’s there are $1s…
I like the look of the Sacajewa coin and it’s a lot easier to differentiate it from a quarter. They don’t weigh more than a quarter does, but with the gold color I quickly know which is which! I have an uncle who works a side business at sci-fi/gaming conventions and only gives out Saca dollars as dollar change. Everyone always seemed happy with it, but I think it was more of a novelty thing.
Currency altogether is becoming irrelevant. I haven’t had cash on hand more than a handful of times in the past year.
However, I don’t see why anyone would choose a heavy coin over a light paper dollar.
“You’re forgetting about the secondary metal market.
If the inherent value of the raw materials in a penny are worth more than the penny as a currency…”
Sure, it costs more than one cent to *make* a penny, that value was not the total metal value therein.
Going to $1 coins and ditching the $1 bill would be great. Keep the $2 bill around though — it’s not like they get replaced at a high rate at all.
Heavy coins are beneficial. People will get stronger arms and legs from carrying the extra weight and pockets and purses will become more durable. That is exactly why I walk around with my pants bulging with quarters right now ! Other people seem to find easy ways to reduce the amount of coins they carry. I guess they just want to be all “European”.
I don’t see the problem with using a $1 coin. I use them from time to time, it sucks how many cashiers scoff at them. It’s not like they are the giant Eisenhower dollar coins of the 1970s. My pockets and/or coin purse aren’t weighed down by the “gold” dollar coins!
They will last longer than paper dollar bills. Dollar coins would reduce the amount of money we spend on paper, and not clog up our wallets and pockets with old, wrinkled, soggy dollar bills that should have been shredded years ago.
The US needs to save money, it would save approx 600 million a year just by switching to a dollar coin and getting rid of the paper dollar bill once and for all.
As for a $2 coin, I don’t think that’s necessary, at least not now. The US still prints $2 bills….as of right now, it is a waste of money because so many Americans think they don’t make the $2 bill anymore, and should they come across one they save it thinking it’s worth more than two dollars.
The US should phase out the dollar bill, not go cold turkey. And use all the excess $2 bills sitting in vaults and drawers, and bring them into circulation.
That way someone would only be getting two $2 bills and one $1 coin for a $5 bill equivalent, and not have to lug around five $1 coins. Their pockets and wallets would be reduced by cutting the amount one $1 dollar bills in half with using more $2 bills.
Then, if people still don’t like $2 bills (you think they would, if they like paper money), then the gov’t phases it out and decides whether or not to make a $2 coin, or just leave it to $1 coins.
I’m also for getting rid of the penny. It’s time prices be rounded to the nearest nickle. I’m still divided on whether this should be before or after sales tax, because I know some businesses would round up, but other businesses such as grocery stores would round down. Instead of something being 19.99 it would be 19.95.
There is a reason why we have not abandoned the paper bill. Strong vending machine lobbies do not want to incur the cost of new vending machines, and there is another reason.
Coins are manufactured at the US Mint. Paper bills are printed at the Bureau of Engraving. You have two entities fighting for the same job.
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I feel that people missed Baker’s point when he implied that if the $1 bill were to be changed into a coin, it would be more readily spent. (BAD IDEA FOR FRUGALISTS!)
If pennies were terminated, the “rounding-up” system would likely RAISE the prices of most items. (BAD IDEA FOR FRUGALISTS!)
To add insult to injury, here in Canada, once the $2 coin was introduced, the cost of virtually EVERY item that could be obtained at a machine or through a slot WENT UP! (Yet again, BAD IDEA FOR FRUGALISTS!)
Frugality to me is about saving our hard-earned money regardless of what form it is in, and to disregard coins because they are simply “small change” and “annoying” is a habit that could carry on into other facets of life, inevitably losing us all money.
If JD taught me ANYTHING these past few years, it’s that money management includes counting change — a little extra effort that goes a LONG WAY — for it’s saving that change (not spending extra money) that can help us build towards a more financially-stable and wealthy future.
I just wanted to say in response to a few things people have said:
a) in Australia, the total price is rounded up or down, not the price of each individual item, and only if you pay cash.
b) in Australia (and obviously other countries too?) our coins and notes are all obviously different. There is no way you could confuse a $1 and $2 coin, or a $2 and 20c coin. And all the notes are different colours and sizes. It’s very obvious just by looking in my wallet how much money I have.
c) interestingly enough, Australia changed their currency altogether in1966 – from pounds and shillings to dollars and cents. I’d say we got along all right. We then changed our $1 note to a coin in 1985, then our $2 in 1988. About the same time all our notes were changed from paper to polymer. We’re all managing fine.
@Adrian #120
Small change being spent so easily is a matter of attitude. If you think there is little value in all those coins you’ll treat them as such.
I’ve never heard of anybody mistakenly paying with the wrong bills in the U.S. What kind of silliness is that? It would have to be tourists, and tourists anywhere get confused with foreign money. Frankly, I’d like to see wheat pennies and Indian head pennies back in circulation. I save every one I see. I have no interest in dollar coins or five dollar coins, and it would appear that most of the country feels the same since there’s no movement to use them.
When I lived in Japan, whenever I got a 500 yen coin in change, I would make a point to not spend it, and then tossed it into a coin bowl. I ended up saving nearly 70,000 yen (about $750), that paid for a trip to Thailand. Not a shabby way of saving money!
Of course, back home in Canada, the $1 coins are used to pay for laundry, along with the quarters, so no more ‘free’ trips to Southeast Asia!
@Darnell #104 – Just put Lincoln on the dollar coin and the problem is solved.
Earlier on one dollar was quite a decent amount of money, but today inflation has undermined the value of the one dollar and, as in all other countries, coins are for small value currencies.
One might argue that it makes sense to change the one dollar bill into a coin, but it’s also a sad reflection of the continuous government erosion of the value of peoples’ money. Unless you change your monetary system the one dollar bill probably will become a coin in the future. Later on it will happen to the 2 dollar bill, the 5 dollar etc. Just like it happened in many other countries where inflation has lead to coins with high numbers (not included countries with hyperinflation).
Before we moved offices, our vending machines at the old building took gold dollars. The change machine only turned bills into gold dollars. So every once in a while someone would end up putting a $20 bill in it. I had done it and ended up with 20 gold dollar coins
Spending them was difficult. A McDonald employee called over his manager. He didn’t believe it was real currency. Other incidents were people thinking I gave them quarters. And vending machines in the new building not taking the dollar coins and getting jammed.
Actually, once I helped out my mom with an event handling money. I gave a man the “new” five dollar bill. He came back yelling at me telling me I passed him a fake bill. I told him I have plenty of the old $5 bills if he wanted, but it wasn’t a fake bill and that it was just new. He was angry, told me he never heard of a new five and swapped the bills rudely.
People don’t like change. (Pun)
Inflation has eroded purchasing power significantly over the past 100 years, so converting to $1 (and even $2) coins is probably long overdue. They would last longer, and could be designed properly to be easily distinguishable from other coins.
I tend to try and give exact change for cash purchases, so my pockets wouldn’t get weighed down with dollar coins. For those that tend to collect change, just save it in a jar at home and cash it in periodically. If the experience of Canadians and Australians is representative, this old-fashioned savings method can be quite effective and “spare change” can add up to significant amounts.
As for vending machines, they would get converted to handle the new coins, although not without some grumbling from the owners.
As for the penny, it is definitely time to put it out to pasture. The Australian model of “rounding up/down” to the nearest 5 cents for cash purposes is an elegant solution. Since prices are rounded in both directions, on average you shouldn’t be any worse off.
JS
The thing about the U.S. is that you don’t have a $2 bill, so the $1 bill is a bigger deal. I was against the coins up here in Canada at first but now I would welcome a $5 coin as well. You don’t forget about your coins like they’re just nickels or quarters, you are well aware of the value of the loonie and the toonie as we call them. Since so many of us are hooked on drive-thru coffee we use them for that quite a bit.
At the same time a lot of tradition gets lost. I can understand the mentality of “just because the rest of the world is doing something doesn’t mean that we have to do it”.
Pennies won’t go away until retailers stop trying to kid people that a $10 is really a dollar cheaper at $9.99. If they do go away, then we’ll all be paying $10 for goods marked $9.99, which at a penny per item could, over time, add up to a nice windfall for merchandisers and a nice rip-off for consumers.
Americans have had dollar coins in the past. People in my father’s generation were happy to see the silver dollar go, because it was heavy, bulky, and would wear a hole in a man’s pants pockets. The two reasons no one liked the Susan B. Anthony coin are a) few people want to carry a pocketful of nuisancey coins around and b) they’re so close in size to the quarter that it’s easy to accidentally pay for a 25-cent item with a dollar coin.
And we know very well that given a quarter-sized dollar, it will be a matter of…what? minutes? seconds?…before vending machine owners jack up the price of a can of sugar water to a dollar and then to two dollars. Another fine rip-off for the consumer.
Also, they’re junky. Those of us who remember when coins were made of silver and copper and were worth about their face value will not even bend over to pick up a penny, a nickel, or a dime, because a piece of base metal that goes “clunk!” instead of “ping!” when you drop it on the floor doesn’t feel like real money.
Our money is debased enough without giving us more cheesy coins to advertise it.
@ Funny about Money — I have silver dollars too, and our toonies and loonies are not as heavy! They’re very easy to tell apart from each other and from quarters (right down to the texture on the sides). If the U.S. was smart, they’d make the coins distinctive and lighter and people wouldn’t have those problems. Mind you, I have a hard time telling U.S. bills apart, so I don’t have much hope!
I don’t remember people jacking up prices on vending machine items or other coin operated things when we got the loonies. Prices went up over the years, of course, but that was due to other factors and not the introduction of a new coin. (I was very young then, so please feel free to correct me!) Machines that take loonies and toonies give change, just like machines that accept bills.
@ funny about money – in Australia we have plenty of things for sale for $9.99. If you bought three things for 9.99 you would actually pay 2c LESS, because the total would be $29.97, and would be rounded down to $29.95.
We have a LOT of things for $9.95, rather than $9.99 – same psychology, but with the added ‘it’s not being rounded up so I’m saving even more’ thing added in.
Yet another Canadian weighing in to say I love loonies and toonies. And, of course, the only way the US will switch is if you stop making dollar bills and start pulling them out of circulation.
While you’re making changes you might try making different denominations of bills different colors so you can instantly see how much money you have and adding Braille to the corners for the blind. We’re doing that and it’s helpful while the bill is relatively new and stiff. I don’t think it’s possible to read the Braille on an old, floppy bill though.
“The biggest draw-back is definitely strip clubs though and probably the best reason to keep low-currency bills.”
This is a personal finance blog, not a blog for losers who have to objectify women in order to feel better about themselves.
@Artemis (#134)
Thanks. I didn’t notice that comment before. I’m not going to remove it now because it’d make your comment confusing, but I’ll try to make sure stuff like that doesn’t slip through the cracks again. I’d normally delete a line like that and let the rest of the comment through. I apologize for not catching it this time.
I bought a digital coin counter last week and have $88 so far this month. I usually average about $50 a month which I squirrel in my savings account at ING Bank. For me, having change is a necessity when you have to do laundry or park anywhere in downtown LA, Pasadena, Santa Monica or any city where parking is a revenue source (Sign of the apocalypse: a parking meter had takes credit cards). As for the penny, I doubt people are ready to have their sales tax raised in increments of 5%.
The people complaining about all the loose change just aren’t used to using it. Here in the UK we have no real need for 1 and 2 pennies. I ditch them in the charity boxes that are at many tills.
If the smallest note is £5, there is little need to have more than £5 worth of change (which will mostly be a couple of £1 (or £2) coins. You need to get used to using the change for purchases. Say you have £4.30 in change and you are buying something at £6.80 – If you just hand over your £10 note, you’ll get another £3.20 in change…but it’s common practice to give over £11.80 and get a £5 note back. Voila, less change. Most vendors are happy to do this (if not encourage it) as it keeps their level of change in the till.
Also, the reason people end up with more change when travelling is that the coins look different, so feeling pressured at the till point you grab a note rather than trying to sort through the bunch of strange coins.
Not going to happen any time soon.
Penny’s are made of copper. The biggest copper producer in the US is Arizona. Arizona is represented in Congress by John McCain. The US Mint will never be allowed to get rid of the penny as McCain has too much clout as a senior senator.
My guess – 10 years after McCain retires we’ll get rid of penny and dollar bill.
I love having 1 and 2$ coins. When I fist moved to Australia I spent them more, but as I adjusted I don’t think my spending habbits have changed that much from what I did when I lived in the US. The best part is when you think you have no cash but then find enough money for a cup of coffee or lunch in your change.
With a $5 bill as your lowest denomination, and a $2 and $1 coin such as in Canada, the most amount of coinage you can get dollarwise in a transaction is 4 one dollar coins or at the least, two two dollar coins. This will not drastically weigh you down. I for one would rather have a couple coins you barely notice over a huge wad of dollar bills.
I’d sooner use coins to do trading than bills of credit. Common sheets of paper money have practically no inherent value (which is what we use today for larger amounts of monetary transactions)! A coin contains metal which has value due to scarcity, usefulness and demand. Most paper (note: there are some rarer species of trees) is too common and abundant to be worth anything. Even a base metal has a small amount of value which is better than a piece of paper worth not even a penny in value. I believe it is time we go back to a system where money has most (if not all) of the value stated on the coin face. Better yet, let’s dump the whole idea of currencies and simply trade in bullion coinage, that way banks cannot have power over the masses and all of society. The power of money should belong to the people (not to a bunch of crazed, manipulative central banking control freaks)!
The U.S. Constitution, in Article 1, Section 10, states that coined money in silver and gold is the only legal tender. The Federal Reserve Act of 1913 is illegal based on the U.S. Constitution. It’s time we take our money and government back. Please visit http://www.opencurrency.com. Sign your business up to accept their metal backed participating currencies. It is 100% legal!
I also believe there needs to be a black market metal spot price and “official” metal spot price to keep the market in check and prevent corruption from specific interests (private, public, government, corporate, etc). The system we have currently always gets manipulated by the Federal Reserve and central bankers. The U.S. Dollar is irrationally high right now, whereas metal spot prices are manipulated by the banks to be artificially low. This is not right for those who have invested logically, properly, honestly and responsibly in response to the actions of government and banks that care not how much debt they take in and cannot and do not intend to repay. This is common sense folks!
Interesting discussion! Regarding US coins: could we get rid of the one-cent, five-cent, and twenty-five cent coins and revise our pricing so that we start with zero and move up to .1 (a dime), .2 (two dimes), .3 (three dimes) etc, We would have coins with values of ten cents, twenty cents, fifty cents, one dollar, two dollars, five dollars, and so on. Any thoughts on how that would affect the overall ‘cost’ of things in the long run? Would we need a .05-cent value coin too as a buffer for rounding? I’m just wondering because we haven’t used a half-cent in ages yet nobody complains about that. How much inflation must there be before dealing in hundredths of a dollar becomes ridiculous? Don’t we have a quarter-dollar coin only because of the old Pieces of Eight and Two Bits–one bit being twelve and a half cents? And where are those fifty-cent coins I used to see often when I was a youngster in the sixties? I’m in favor of dollar coins and two-dollar coins simply because I’d rather have coins with some value weighing me down instead of useless pennies, nickles, and dimes. I do think, however, that the US government will remove dollar bills from circulation sooner than later–mainly because they didn’t bother to redesign the dollar bill and WE do all the discussing about it and THEY don’t. Now I must run to the CoinStar with a few hundred nickles and pennies that I can turn into something less cumbersome!
Phasing out the paper dollar is one of the best ideas that i have ever heard of. I have been spending dollar coins for a few years and they are much easier to spend. Besides we are talking about $1. It’s not like you have to carry around 25 or 30 of them. you probably use a debit card if you make that many purchases in a day. as for the rest of us that just spend a few dollars a day on coffee, it is much easier. As for the penny, I would like to see it around for a little longer. All that change saved up after a long time is good when you turn it in and get a pretty good amount of money. And for everyone complaining about change, how is it so annoying when you barely notice small change anyway. i think you all read this and thought about it for a second and decided it was annoying. then you went back to forgetting about it. Quit whining about keeping paper dollars. no one wants to upset their normal lives. Its a better idea so just accept it.