"Are you a penny pincher?" "Can I give you a penny for your thoughts?" After this week these common phrases will make less sense now that the Canadian Mint has stopped production of the smallest domination of money.
The decision was made after the government found the cost to produce the penny outweighed its usefulness. It's expected the end of the Canadian penny will annually save $11-million of taxpayers' money. So what can you do about those jam jars full of pennies you have in your kitchen? Are they worthless? According to the government, absolutely not! The value of the penny does not change but the way we use it might be different. Here’s what shoppers can expect.
Cash Sales Will Be Rounded
Cash purchases make up for 22 per cent of all transactions in the country. We'll be seeing less of the .99 cent days - now, if you pay cash for an item retailers will round the cost to the nearest nickel. For example a $1.53 coffee will now cost $1.55 and a $5.61 sandwich will be $5.60. However, if you pay with debit or credit cards your transaction price will not change.
Big retailers like Walmart, however, say they will not adjust their prices, as prices ending in .99 or .97 are attractive to customers. It's important to note that the price of the item does not matter as much as the total price plus tax. For example an item costing $1.00 is $1.13 with tax in Ontario, but will now cost customers paying with cash $1.15.
The Impact on Retailers
Some bigger stores like Loblaws and Home Depot have new cash registers in place to deal with the price adjustments when shoppers pay with cash. They promise to always round down, to help out their customers. Smaller businesses say they will make the change manually.
Will Businesses or Shoppers Lose Money?
Some businesses are concerned customers might take advantage of the round down prices and get a break on the price of items, especially small ones costing less than $2.00. But research in countries that have phased out the penny shows that is not the case. Countries that have dropped the penny include New Zealand, Australia, the Netherlands, Norway, Finland, and Sweden. The U.S. is also looking at phasing out the one cent coin to save taxpayer dollars.
Where Can You Dump Your Pennies?
The best place to trade your pennies for larger bill is at your local bank. You can add 50 pennies to each roll, and cash them in. You can also donate the pennies to places like Free the Children, your local Food Bank or Habitat for Humanity to name a few places running penny drives. You can also continue to use them. According to the Canadian Currency Act you can use up to 25 pennies per transaction.
Whatever you do with your pennies make sure to hang on to a few for a memento. The penny has been around since 1858 and was the first ever Canadian currency. Before then Canadians had used British coins. It has always had a maple leaf on its reverse side, the first penny had Queen Victoria on the front side, the most recent penny bears Queen Elizabeth II. Even though the penny is gone, the phrases that represent the smallest form of currency will probably remain. Its important to know that even the smallest amount of savings can start with just one penny.
Looking for more information on the penny's transition? Check out these fact sheets for consumers and business.
