Understanding the Penny Phase-Out
You may have heard the news: the U.S. government is officially phasing out production of the one-cent coin. While it may feel like the end of an era for the humble penny, your bank is committed to ensuring a smooth transition. This is what you need to know about the phase-out and how it affects your daily banking and shopping.
Key Dates and Decisions
The move to end penny production is driven by the fact that the coin costs more to produce and distribute than it is worth—nearly four cents per penny. Here are the important dates surrounding the decision:
- February 2025: President Trump directed the U.S. Treasury to stop producing new pennies as part of an effort to cut government spending.
- August 2025: The U.S. Mint delivered its last shipment of new pennies.
- October 2025: The American Bankers Association (ABA) advocated for the Federal Reserve to maintain full penny deposit services, even at closed coin terminals.
- November 2025: The last new coins were minted.
What This Means for Your Transactions
The phase-out will be gradual, and the banking industry is working to manage the operational impacts. While 250 billion pennies are still estimated to be in circulation, banks and retailers are relying solely on recycled coins since production has stopped.
Your Pennies Are Still Legal Tender: All existing pennies remain legal tender. You can still use them for purchases or deposit them at your bank. Banks will continue to accept and process them.
Cash Rounding May Occur: In areas where retailers or banks run out of pennies, they may temporarily round cash transactions to the nearest five cents (the nickel). This is like systems adopted by countries like Canada and Australia after phasing out their lowest-denomination coins.
Electronic Payments Are Unaffected: If you use a debit card, credit card, or other electronic payment method, your transaction amounts will not be rounded.
Bank Changes: You may notice signs encouraging electronic payments. Banks will clearly communicate any necessary changes to their customers.
What You Can Do to Help
The main issue is slowing circulation—many people stash pennies in jars and drawers. You can play a vital role in easing the current circulation slowdown:
Recirculate Your Coins: The banking industry encourages everyone to gather up unused coins.
Bring Them In: Check your home, car, or coin jars and bring those pennies to banks, retailers, or coin kiosks so they can be put back into the supply chain.
Bring Them In: Check your home, car, or coin jars and bring those pennies to banks, retailers, or coin kiosks so they can be put back into the supply chain.
Complete elimination of the penny requires a decision from Congress and the President, but for now, we're all adapting to the end of production. Thank you for helping us keep the currency system running smoothly during this transition!