Making Sense of Not Making Cents: What To Do with Pennies

Do you have pennies piled in cups or jars at home because you rarely use cash?

The U.S. has stopped making pennies, but our giant penny isn’t going anywhere. Come to the St. Louis Fed’s Economy Museum to see it and explore a wealth of other exhibits about money and the economy.

If so, you’re in good company. Cash purchases in 2024 dropped to only 14% of U.S. transactions, according to a 2025 Federal Reserve Financial Services (FRFS) study. The increase in noncash transactions is one of the reasons it made sense to end production of the 1-cent coin, the Treasury Department explained in answers to frequently asked questions about the discontinuation.

Penny production stopped Nov. 12, 2025, around six months after the news broke about the planned phaseout. The move raised questions about everything from how stores should round totals for cash purchases to what people who have used pennies to tile floors should do to replace missing coins.

Read on for answers to the more common questions, along with reasons for the penny phaseout and details about the Fed’s role in penny distribution.

Reasons for Phasing Out Pennies

Scott Wolla, an assistant vice president in the St. Louis Fed’s Economic Education Department, outlined the economic arguments for getting rid of the penny:

• Cost: It took 3.69 cents to make each 1-cent coin.
• Minimal purchasing power: It’s hard to buy anything with a single penny.
• Low use: Coins that sit in jars (or serve as tiles) aren’t doing their job of helping with transactions.
• Efficiency and environmental costs: Mining zinc and copper for pennies, for example, has an environmental cost.
• Successful track records for abolishment: Countries including Canada (in 2012), Australia (1992) and New Zealand (1990) have discontinued their lowest-value coins, as noted in a 2025 article by Federal Reserve Bank of Richmond economists.

In its FAQs, the Treasury Department cited several of the same reasons for stopping penny production, including the penny’s low purchasing power and the increase in noncash transactions. The Treasury Department also noted that the U.S. Mint projected “an immediate annual savings of $56 million in reduced material costs.”

What the Fed Is Doing to Help Circulate Existing Pennies

Federal Reserve banks like the St. Louis Fed work with commercial banks to circulate coins, including pennies. While new pennies aren’t being made, there still are about 114 billion pennies in circulation, and the Fed will continue to recirculate those pennies “for as long as possible,” the Treasury Department FAQs said.

Reserve banks contract with coin terminals operated by armored carriers to store, receive and distribute coins. (They take deposits only from commercial banks and other depository institutions, not consumers or businesses.)

Coin distribution locations that had previously stopped accepting penny deposits began resuming those services Jan. 14, according to an FRFS press release. In the Eighth Federal Reserve District, the St. Louis Fed’s main office and the Memphis Branch office had earlier started accepting penny deposits.

FRFS, which provides payment services to financial institutions across the country, will monitor the flow of penny deposits and determine if it’s possible to expand penny-ordering options with the penny no longer in production.

None of the coin terminal locations in the St. Louis Fed’s District were filling penny orders as of Jan. 27 “due to insufficient inventory,” according to a list on the Federal Reserve Bank Services website. Some locations in other Reserve bank districts were filling penny orders as of that date, however.

Frequently Asked Questions about Pennies and Penny Supplies

What should I do with the pennies I have at home?

The Treasury Department encourages consumers to spend their pennies, which the department said will “support a smooth transition.” Having pennies in circulation will give retailers and the companies that provide them with systems for accepting payments time to adapt.

Could I melt pennies for their zinc and copper?

No. The penny will continue to be recognized as legal tender indefinitely, the Treasury Department said in its FAQs. And it’s illegal to melt legal tender for the resale value of the metal, according to the U.S. Mint.

Are banks and stores required to accept my pennies?

Consumers can still deposit pennies at their banks, though they may be required to roll or wrap larger quantities. Retailers also should continue accepting pennies and giving pennies as change while the coin is in circulation, the Treasury Department said. If there aren’t pennies available for change, businesses may round to the nearest 5 cents, but different states could have different ways of handling the rounding.

Will I pay more at the store because of rounding?

“For cash transactions, final transaction prices will be rounded down just as often as they will be rounded up, so there should be no overall effect on consumer prices,” the Treasury Department FAQs said.

But estimates from different studies vary. For example:

• Estimates outlined in the Richmond Fed article showed consumers could pay more in a “rounding tax”—about $6 million annually.
• A 2018 study of grocery store transactions after the elimination of the penny in Canada found the stores benefited more from rounding than consumers.
• A 2007 study of transactions at a convenience store chain in seven U.S. states found the effect of rounding to the nearest nickel would be “very, very small,” with the benefit going to consumers.

Has the U.S. phased out coins before?

Yes. The U.S. stopped using the half-cent in 1857. At the time, the coin was worth more than 8 cents in today’s currency, so eliminating the half-cent then was a bigger leap than stopping production of the penny today, said Wolla, of our Economic Education Department.

People afterward had no problem living and conducting business, even though the new smallest unit of currency—the penny—had a value of about 17 cents in 2024 dollars, he said.

Half-cent coins are now collectors’ items.