Time to do away with coins?

David W. Briggs, a reader from Marion, Ma., writes:

In the article on tips for saving money (Consumer Reports, June '09) entitled "How to squeeze a nickel," one person reports setting aside every $5 bill he gets.  What a change inflation has made! 

Fifty years ago $5 was worth 5 hours labor at minimum wages.  A nickel now will buy what half a cent would buy then.  Coins were originally designed to be durable for daily transactions and fragile bills for infrequent large transactions.  Now, for many, coins are considered a worthless nuisance.  While prices at x.99 cents and with sales tax making a total price in odd cents, it is easier to use a credit card.  There has been talk of eliminating the penny and the dime.  

Perhaps Consumer Reports might review whether it would be in the consumer's interest to have a complete revision of our obsolescent currency.

Should coins be eliminated? What do you think?

Comments

[Mike Nash]

Its long overdue to get rid of pennies - coins still have a role, but with pennies, lets just round it off.

[Natalie Carpenter]

Putting the penny to rest is a no-brainer. I would venture to guess we wouldn't miss the dime either (though I do like the sleekness of the dime the most out of all of our coins.) For those of us that keep coins in our purses, our backs and necks would appreciate the change (pun intended!)

[Steve]

Coins don't need to be done away with, but they do all need to be shifted up in value. The penny should be done away with, but so should the dollar bill, to force the adoption of the $1 coin (which already exists!) and a new $2 coin. In fact while we're at it might as well go straight to the $5 coin, so we don't end up back at this point in a few years.

Electronic money would be even better, but I think we're a few years away from that being really viable as the only currency.

[Wombatish]

The only real problem with doing away with coins is that is will have to drive up prices a little, since everything will have to be on the dollar, and people will still want some way to divide the dollar, in my opinion... I mean, the penny is the only non divisible denomination in our currency currently. It seems like a big jump to make it the dollar.

I like the European system, with the 1 euro coin.. vending machines and buses still take it... and while having a lot of coins around can be annoying, since they have a 5 euro bill, it's really not that bad.

They still have 1,2,5,10,20 and 50 cent pieces, though, but they're less common than they are here.

[Diana]

I travelled to Australia a few years ago and surprised that they didn't have a penny equivalent. It was so nice! I agree that the 1 cent coin should be eliminated. You can only use a penny in manual trasactions (i.e. it won't work in a vending machine or parking meter, etc).

[Phillip]

I'm totally on board with a new $5 coin and elimination of the penny and the $1 bill.

It would save loads of money for the US Mint.

For some reason though, I feel kind of attached to the dime. I feel like we'd be picking on the dime if we eliminated it. Weird... I had no idea that a particular denomination of currency would generate an emotional response....

[Michael]

I think the problem isn't that there are too many denominations of coins, but that in the US, our tax is added up post-purchase.

Countries with a VAT calculated before the purchase tend not to have a huge problem with change like the US. When I lived in Germany, I had much less spare change laying around because everything was rounded to .5 or .10 increments, so I could actually use the change instead of accruing loads of pennies like here. I only ever had a few euro cents to try to get rid of.

[Mel C]

Could someone that has knowledge of how taxes on purchases work answer this question?: Why not include the tax on the sale price? Then you can sell a doohickey for a nice, round, $10, with the understanding that the actual price of the item is lower. Only then can we do away with coins... But even then, now that I'm thinking about it, when we get paid we have a percentage taken away by taxes, and it almost never leaves one with a pretty round number. I guess it'll be a bad sign when we no longer need cents. I remember when I went to Spain in the mid-90's (before the introduction of the Euro), and everything was in pesetas, no cents, and the exchange on the dollar was roughly 1 dollar per 100 pesetas, so that 1 peseta was a tiny little coin about the size of a penny. Food for thought.

[Jason]

Instead, coins should be made of real value - a precious metal.

Would we be in this problem without our central bank - the Federal Reserve - which creates the inflation?

[Brad Carter]

I say get rid of ALL coins and paper money. The government is losing money by continuing to manufacture money, so why not just use all that wasted money to credit some kind of anonymous debit card system.

[Clay Hamilton]

I'm confused about the idea of eliminating the penny... wouldn't that require a very broad restructuring of sales tax amounts and pricing for pretty much everything? If you don't have pennies prices have to either be whole dollars or some other cent increment.

[Bob]

So what would we do without coins then, round everything up to the nearest dollar? No thank you.

[Evil Monkey]

With the new world economy coming closer, expect larger denomination coins. The northern hemisphere coins are already minted and waiting for your government to fall to the almighty worldbanc's will.Good luck ever getting rid of coins. They have been on this planet since the beginning of humanity.

[Steaming Pile]

I think what with many people's recent experiences with credit cards, turning over our currency system to them is the mother of all bad ideas.

The real problem with coins is that they're not worth anything. The only one that gets widespread use is the quarter, and five dollars' worth of those in one's pocket can get quite heavy. Five dollar coins, not so much.

I suggest adding a $2, a $5, and a smaller 50 cent coin. To help them circulate, get rid of the dead presidents and go back to artistic representations of Liberty like we did a century ago. As much as we all revere JFK, he should go first. His commemoration, along with the 1964 silver shortage and the fact that until 1968, the half dollar still contained some silver, caused the half dollar to very nearly cease circulating. You got one, and you hoarded it. Now, you get one and you have no idea what to do with it because no vending machine will accept it, cash drawers aren't designed to hold them, and they're just too big.

Pennies and nickels, which cost the government more than they're worth to make, should go away altogether.

[shonky McShonk]

I bet if you're out of work or under employed you wished you had some coins.

Get a BIG container and save all the change you get. When the container is filled take the coins to a FREE coin counter -usually a bank- and turn them into bills.

Now go crazy and buy that -fill in the blank- or have that super meal you could never afford.

Say a prayer to the coin deity and then start all over again.

[Jeff]

Pennies and nickels cost more to make than they are worth. Time to retire them, for sure. I haven't seen a half-dollar in circulation in years, probably OK to retire those, too. Dollar bills cost little to make but they wear out in no time -- they should be replaced with dollar coins, which make up their extra cost with a much longer life span. And I agree with Steve's suggestion of $2 and $5 coins, for the reasons he stated.

But I draw the line at electronic money. Official currency should be tangible and freely/privately spendable. Electronic currency is inherently not private and requires additional technology to transfer funds. Good luck if your personal device fails or if you can't afford to maintain it. And then there are the costs associated with transfers or holding funds. Haven't the hidden costs of debit cards taught us anything?

[Alexis]

Pennies are all but worthless in day-to-day transactions at this point; they don't necessarily need to be phased out and made valueless, but I think the Mint should stop producing them.

The $1 bill is an unnecessary expense and it would save the taxpayer a fair amount of money over the long run if $1 bills were phased out and replaced entirely by the $1 coin, $2 coins were introduced (after the manner of Canada's Toonie), with $5 bills being the new smallest bill.

[Chris Canfield]

Most men's wallets these days can't even take coins. While dollar bills are less durable than dollar coins, I'd venture that for the average person they're a lot easier to deal with.

I'd also venture that digital money is a lot less far-off than people think. The only thing keeping credit cards from being entirely ubiquitous is the visa charges on small purchases, and you can paypal friends directly from your phone. At this rate, the treasury won't have to replace physical cash: it will be replaced soon enough on its own.

[Steve]

Thomas Jefferson knew what he was doing when he set up our currency system to include small change. Before doing away with all coins, I'd suggest that any review read his original documents on WHY we need small change. Pennies, loose 'em. Wihta Son of Illinois in the White House, it's not likely, but if obama could be brought on board he could probably overcome the traditional uproar from that state whenever the sugetion is made. Also, put Lincoln's face on ANOTHER COIN if you want to get around one of the main objectives usually raised to dumping the penny. I'd suggest the dime, if it weren't for the fact that it's too similar in size to the penny . . .

[John]

One and five dollar coins sound nice to some, but they forget that Americans tend to HATE coins. They may be durable, but they are heavy, unwieldy, and take up a lot of space. I work at a bank, and I've never met anyone outside of coin collectors who actually want the dollar coins. Whether or not it's the best option doesn't matter, because you won't be able to force a change in a culture that doesn't want coins. I do like the idea of having prices that don't end in a random change amount, but to get that done you would have to change laws in every state, and I would also consider that an overstepping of bounds by the government. Maybe the treasury should look into making bills more durable.

[Tom]

I think we should kill the worthless penny/ and to lighten loads in pockets,purses and on the treasury make a new Dime worth $10.00, a new nickel can be $5.00, keep the quarters for now and make the new dollar coin a lot lighter, keep the old dimes and nickels and everything will round up/down to nearest nickel. Why the heck not!!!

[Julia]

I would like to seee $1 bills done away with as they are dirty and I don't like handling them. If we go to coins for $1 or $2 bills I hope we make them small. When England first had a one pound coin it was huge and 4 of them were very heavy in your pocket or purse. I am with others I would like to see all coins and bills eliminated. I hardly use them at all, I draw $20 and it lasts me 2-3 weeks. Everything goes on my debit or credit card.

[Samuel]

Ahh, the Swedish rounding problem. Everyone here doesn't seem to realize the Treasury's answer on eliminating the cent: it's a hedge against inflation, hence why they haven't tried to remove it.

And I've always gotten a lot of change when I've been to Europe, but I spent it too. I don't keep my money floating around, it does no good sitting at home.

[Bill]

I can go without having all my purchases rounded up to the nearest dollar.

I do like the idea of higher denomination coins and getting rid of the penny and dollar/2 dollar bills

[someone]

The problem is you can't do away with the penny. Businesses will still do accounting down to the penny, resulting there will always be a need to give change accurately. Also the stupid psychological nonesense of $.99, causes prices everywhere to be off that annoying penny. Instead of doing away with coins, using more coins is better economically. That's why the government wants so bad for people to use the $1 coin, which hasn't worked, but would save billions in handling.

Also the problem with paying small amounts with credit/debit, is those credit companies charge big fees to vendors, that's why there is often a minimum charge or else they are actually losing money on a transaction. I don't think it's fair to give card companies 2-3% of every dollar spent.