Penny Phase-Out FAQ
The penny is being phased out as part of a national effort to reduce costs and simplify cash handling. Because it now costs more to make a penny than it’s worth, new pennies are no longer being produced. As this transition takes place, First Fed is here to ensure the change is as seamless as possible. Below are answers to some common questions.
The cost of producing the penny is $3.69 cents[1] and exceeds the coin’s value. President Trump ordered that the U.S. Mint stop producing the penny in February 2025 with the last pennies being produced in November. Additionally, the Federal Reserve, which handles the distribution of currency, has stopped distributing and accepting pennies at roughly 50% of its terminal locations as of the end of October[2]. The terminal locations are where banks deposit or withdraw coins they need for operating and with 50% of the terminals closing, it will make it harder for Banks to access or deposit pennies. These changes are expected to create operational challenges for the retail and banking industries where cash handling procedures will need to be updated as the penny circulation slows.
There are still an estimated 300 billion pennies in circulation which exceed the amount needed for commerce according to U.S. Mint.[3] We do not yet have a shortage but as more time goes by, the circulation with slow and a shortage is expected.
Yes, the penny remains legal tender and can be used for retail transactions and are still accepted by First Fed and other banks and retailers.
Yes, as of the date of this communication, we are still providing pennies to customers who place orders but not to collectors. If this changes, we will update our website.
Retailers and banks may temporarily round cash transactions to the nearest five cents. This is similar to what countries like Canada and Australia did after phasing out their lowest-denomination coins.
- We are monitoring the coin circulation closely.
- We are working on operational adjustments that will allow us to service and limit impact on customers.
- We are encouraging customers to use electronic payments which remain unaffected by the phasing out of penny. Credit and debit card transactions will continue to be processed in exact amounts with no rounding.
- We are working with banking and retail industry groups to advocate that the government should create a law that will result in uniform rounding of cash transactions.