A Penny Saved Is a Penny…Not in Circulation

When I was a kid, my grandfather would save pennies. He sleeved them into 50-cent rolls and gave them to me and my cousins for our "savings account." We would dutifully take them to our financial institution and see another dollar added to our passbook. By the time I went to college, he had donated a tidy sum to my textbook fund.

But now the penny might be going away. Inflation has depleted its usefulness and it now costs $0.0369 to mint a coin only worth one cent. In 2024, the United States minted 3,225,200,000 pennies at a whopping loss of $85.3 million, according to the U.S. Mint's 2024 Annual Report. (I did the calculations on my own and got $86.1 million, but what's a million dollars here and there? Could this be a mere rounding error?)

The Treasury announced on May 22, 2025, that it would stop production of the penny by 2026, but that the coin would stay in circulation as legal tender. Eventually, as the penny supply dwindles, retailers will round prices to the nearest nickel.

As early as 1990, Congress has proposed legislation to eliminate the penny in cash transactions, rounding to the nearest nickel. One study, published in 2007 by Whaples, found that the effect of rounding would be virtually nothing. In fact, in that study, the consumer came out ahead, by 1/40th of a cent per transaction. The most recent attempt by Congress is H.R. 3047, the Common Cents Act and its Senate companion, S. 1525. Introduced by Representatives Lisa McClain (R-MI) and Robert Garcia (D-CA) and Senators Cynthia Lummis (R-WY) and Kirsten Gillibrand (D-NY) on April 30, 2025, the legislation would direct the Treasury to stop producing the penny within a year and require cash transactions be rounded to the nearest nickel. Like the Treasury's current policy, the bill would leave pennies in circulation as legal tender.

But there have been a few bumps in the road. Retailers are already running short of penny coins. The Federal Reserve distributes minted coins to banks and credit unions, but not to retailers or consumers. September has seen an increasing number of coin distribution locations already run out of penny rolls. This means credit unions are not receiving more coins to put into circulation.

Last week, several trade associations including the National Restaurant Association and National Retail Federation sent a letter to Congress asking for "clear and expedited guidelines and relief" to continue to carry out cash transactions. They requested the provisions from the Common Cents Act be added to any final bill, stating that it would be "challenging to legally engage in cash transactions with customers…." The letter specifically requests the following changes:

1. A federal law is needed to allow business to round transactions to the nearest nickel. At least ten jurisdictions within the United States prohibit this practice. The letter emphasizes that the solution cannot be avoided by changing of base prices, because of state and local sales taxes will impact the final cost.
2. Congress must ensure cash rounding will not violate the terms of the Supplemental Nutrition Assistance Program (SNAP). SNAP provisions guarantee that SNAP customers are not treated more or less favorably than other customers. Rounding the price of food for cash customers risks creating a violation of regulations for those stores that participate in the SNAP program.
3. Retailers cash checks, including paychecks, and must be able to round amounts when pennies are not available, like purchase transactions. Without permission to round up or down, retail check cashers may not be able to assist their low-income customers without bank or credit union accounts.

Do you agree with the retailer asks? Is your credit union running out of pennies? Are you worried about the impact to your members? Leave your two cents at compliance@americascreditunions.org.