What It Means for You and the Future of Digital Payments
In May 2025, the U.S. Treasury placed its final order for penny blanks. Once those materials are used up, likely by early 2026, the U.S. Mint will stop producing new pennies altogether.
If you’re wondering how this change might affect your everyday purchases or banking habits, you’re not alone. Keep reading to learn why the penny is being phased out and how you can confidently move forward in a more digital economy.
Why Is Penny Production Stopping?
The penny costs more to produce than it’s worth. In 2024, it cost 3 cents to make a single penny, resulting in a loss of over 85 million dollars for the U.S. Treasury. With inflation reducing the penny’s purchasing power and digital payments replacing cash, the coin has become less practical. Over the past decade, Americans have increasingly turned to mobile banking and contactless payments, which has declined the use of cash payments, especially for small purchases.
How the Penny Production Phase-Out Impacts You
Cash Transactions Will Be Rounded
Without pennies, cash totals will likely be rounded to the nearest five cents. For example:
- A total of $1.02 may be rounded down to $1.00
- A total of $1.03 may be rounded up to $1.05
This rounding system is already used in countries like Canada and Australia, who have phased out their small coins, and the impact is usually a few cents per transaction.
Retailers May Adjust Prices
Some businesses may change their pricing to avoid rounding. For example, an item priced at $0.99 may be adjusted to $1.00. Others may encourage digital payments to simplify checkout and reduce the need for coins.
Digital Payments Will Stay Precise
If you pay with a debit card, credit card, or mobile wallet, rounding does not apply. Digital transactions will continue to be processed to the exact cent. Choosing digital payment methods, like paying with a debit or credit card, can help you avoid rounding altogether and avoid surprises like lost change.
Pennies Will Still Be Accepted for Now
Even after production stops, pennies will remain legal tender. You can still use them for purchases, deposit them at the bank, or exchange them for other coins. However, as they become less common, some businesses may choose not to accept them.
Looking Ahead to a More Digital Future
The phase-out of the penny is part of a broader shift toward digital banking and digital payments. As the economy becomes more digital, consumers gain access to faster, safer, and more personalized financial tools. While change can be challenging, it also brings opportunities to simplify your finances and embrace new technologies.
Whether you prefer cash or digital payments like debit or credit cards, we are here to help you make informed decisions and feel confident about the future of your finances. If you’d like to explore the benefits of Digital Banking , give us a call or stop by your nearest First Bank & Trust location.