Pennies

by Mike Holman

First off, a big thanks to Mr. Cheap at Financial Security Quest for helping me get the Canadian flag into the header, as well as Canadian Capitalist for providing the .gif file.

On with the post!

This article from the Globe & Mail talks about a recently released Bank of Canada study recommends getting rid of the lowly penny which I couldn’t agree with more. The study determined that the penny isn’t necessary when the average day’s net pay reached $100 which is in accordance with a model created in Britain based on the relationship between the average day’s net pay and a currency’s denomination structure.

Interestingly enough the Department of Finance said there is still significant demand for pennies but an internal memo indicates that this “demand” is really the effect of people hoarding the pennies and fewer are recirculated.

Personally I can’t stand using pennies because they are so useless and time consuming. I always end up with jars and jars of them and have to spend all kinds of time rolling them. Does anybody really care if milk cost $4.99 vs $5.00? Also a report by Desjardins Group says that pennies are costing Canada at least $130 million per year.

Australia, New Zealand, France, Norway and Britain have all eliminated their lowest denomination coins so it can be done. I’m sure there are people who want to keep the penny around for sentimental reasons or possibly because they like holding up the grocery store line while they search around their giant purse for that last penny, but I think it should go. And while we’re cleaning house, maybe the nickel can be tossed out as well.

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{ 15 comments… read them below or add one }

1 The Financial Blogge

The worst part is that it cost more to produce than its worth!
I say we cancel the whole cash system. I only pay with my credit card any way. Airmiles are on the way 🙂
Seriously, I think it would be much easier to deal with electronic money. I rarely carry more than $20 that is for parking downtown and coffee!
FB.

2 MillionDollarJourney

I’d say we horde all of the pennies, melt them down, and sell the metal! 🙂

3 FourPillars

Excellent suggestions both!

Mike

4 Average Joe

Retailers like to price items at $4.99. I think it is psychological. People then ‘feel’ like they are only paying $4 instead of $5.

Same reason why houses sell for , as example, $299,900 instead of just putting $300,000.

But I agree. I hate pennies.

5 Gates VP

Hey MillionDollarJourney, they recently illegalized this practice in the states. The pennies are indeed costing more to make then they are worth.

I just got back from a trip to Geneva, where they deal in swiss francs (CHF), which is ~ 1 CDN and they’ve actually had a 5 CHF coin for several years. They also have a widely circulated 50c piece. It’s a little weird b/c it’s the size of a dime, but we already have a nicely-sized 50c piece, we just don’t use it anywhere.

Personally, I’d like to see the penny dropped and the 50c piece in general circulation. I’d also like to see the 5 become a coin and I’d like our bills to be like the polymer ones they use in Australia.

As I understand it, some of the polymer bills are actually printed at the Canadian Mints, so we have the tech 🙂

6 Canadian Capitalist

Good riddance. I especially hate when I get 4 pennies back. One of these days I am going to dump the entire change jars into one of those CoinStar booths.

7 FourPillars

AV – for me the psychological angle works for high priced items – ie a $99,999.99 condo sounds cheaper than a $100k condo but for small stuff it’s all the same to me.

Mr. C – yes, I’m very proud of it!

CC – I will too…I think they charge about 10% but for pennies it’s worth it.

Looks like we’re all in agreement. I just wish the finance minister/mint could agree – although there might be layoffs involved so maybe that’s why they don’t want to axe the penny.

Mike

8 FourPillars

Gates – I carry around a $5 Aussie bill around in my wallet as a momento of my trip there a few years ago. It’s pretty neat how you can’t rip it.

Mike

9 Riscario Insider

The penny makes no sense — or is that “cents” 🙂

The nickel? That can go too. As Babe Ruth said, “A nickel ain’t worth a dime anymore”.

I’m not keen on a $5 coin, though. For those of use who already carry too much in their pockets, the extra weight won’t be welcome.

I prefer the convenience of swiping a credit card with a loyalty plan (debit cards are a bother because you’re required to key in the PIN and select an account).

10 FourPillars

RI – I’m not sure what the logic behind high value coins is. We have a loonie & toonie. I don’t mind them but I don’t really want any more of them either.

Mike

11 Steve

Be very afraid when someone says they pick a debt or cashless transaction over cash. Are you comfortable with the trail cashless transactions leave behind? Do you enjoy the notion of a seemingly free state? Remove the penny, fine; take all cash out of the transaction and I am in Poland 1985.

12 Steve

Debit…..not debt. I know the diff.

13 FourPillars

Steve, I’m not sure if your extreme paranoia fits in with the spirit of this post, but thanks for your comments regardless.

Mike

14 Cross the River

Careful MDJ,

Not only is it illegal:

Currency Act
Melting Coins
11. (1) No person shall, except in accordance with a licence granted by the Minister, melt down, break up or use otherwise than as currency any coin that is current and legal tender in Canada.
(2) Every person who contravenes subsection (1) or any condition attached to a licence referred to in that subsection is liable on summary conviction to a fine not exceeding two hundred and fifty dollars or to imprisonment for a term not exceeding twelve months or to both, and, in addition to any fine or imprisonment imposed, the court may order that the articles by means of or in relation to which the offence was committed be forfeited to Her Majesty.

It can also be criminal

Criminal Code
456. Every one who
(a) defaces a current coin, or
(b) utters a current coin that has been defaced,
is guilty of an offence punishable on summary conviction.

Her Majesty doesn’t take to kindly to these sorts of things…

And if you want to push the logic further, you are inciting a crime, which is also a crime lol.

But I would tend to agree with you. Unfortunately, the costs of melting and selling might offset potential profit.

I suggest we all make more wishes in fountains and wells as a way to promote charity and get rid of those pennies.

——

FP
I’ve always wondered about those new plastic Aussie bills. Do they bounce?

15 FourPillars

Thanks for the warning CR!

The $5 Aussie bill that I have does not bounce.

Mike

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