Serious question about losing the penny

[LuvOrlando]

Does that mean all the states with taxes in the off ranges of 1%-4% or 6%-9% on up are going to need to drop to 0% or raise to 5% or 10% etc in order to require citizens to pay them?

I'm seeing signs about no pennies in Florida while we are traveling, but if currency is legal tender and a currency to meet an obligation no longer exists then how can people be obligated to pay 8% sales tax on a $1 bottle water?

Are we all just tipping stores the difference now or are we getting 4 cent gift card refunds?

Sort of odd

 

[sam_gordon]

My understanding is if you use a card, nothing changes. You still pay the regular amount.

If you use cash, the store decides how it will handle it. So if the cost is 19.97, and you hand in a $20 bill, the store will either give you a nickel or you're "out" the three cents.

I believe the thought is it will "even out" the more you purchase things. So maybe at store #1, they keep your three cents, but at store #2, you get a nickel back.

Just a guess though.

 

[Disneylover99]

It’s been almost 13 years since we stopped using the penny in Canada. Below is how it’s done in Canada……I imagine it would be similar in the US.

Rounding for Cash: Since February 2013, cash transactions are rounded to the nearest five-cent increment (e.g., $1.01 rounds down to $1.00; $1.03 rounds up to $1.05).

Digital Transactions: Non-cash payments (credit cards, debit cards, and cheques) are not rounded and are still settled to the exact cent.

 

[soccerdad72]

This really won’t be any different than what’s always happened. Costs of things get rounded every day, it’s not like the $1.99 item has tax applied and ends up with a round number.

It’s just going from rounding fractions of cents to rounding full cents.

 

[disneychrista]

In general it will happen as @Disneylover99 said. The change you will receive will round up or down.

 

[gottalovepluto]

You just misunderstood. The penny is not being removed as legal tender so in digital transactions it’s still valid. It’s being removed physically so you when paying in cash then rounding comes into play.

 

[EACarlson]

It’s been almost 13 years since we stopped using the penny in Canada. Below is how it’s done in Canada……I imagine it would be similar in the US.

Rounding for Cash: Since February 2013, cash transactions are rounded to the nearest five-cent increment (e.g., $1.01 rounds down to $1.00; $1.03 rounds up to $1.05).

Digital Transactions: Non-cash payments (credit cards, debit cards, and cheques) are not rounded and are still settled to the exact cent.

This is exactly what is being done at one of the major retailers in my area that was the first to stop using pennies.
They are still legal tender, so you can use them if you have them, they just aren't being produced anymore. It will take a while before the majority are out of circulation and they aren't easy to get.

 

[thanxfornoticin]

It's also the case that the penny will be around for many years to come. They're just not minting them anymore!

 

[kdonnel]

I don't think there is any requirement on how the rounding should occur so in the case of all the local business to me that have signs up for their cash customers they plan to always round down to the nearest nickel.

But even if they followed math rules for rounding assuming a $1.99 item and 6% sales tax:

1 item - 2.11 becomes 2.10 - 1 cent cheaper
2 items - 4.22 becomes 4.20 - 2 cents cheaper
3 items 6.33 becomes 6.35 - 2 cents more
4 items 8.44 becomes 8.45 - 1 cent more
5 items 10.55 stays 10.55 - same price
6 items 12.66 becomes 12.65 - 1 cent cheaper
7 items 14.77 becomes 14.75 - 2 cent cheaper
8 items 16.88 becomes 16.90 - 2 cents more
9 items 18.98 becomes 18.90 - 2 cents more
10 items 21.09 becomes 21.10 1 cents more

So in those 10 transactions the store gains 8 cents due to rounding but loses 6 cents so only up 2 cents.

 

[kdonnel]

It's also the case that the penny will be around for many years to come. They're just not minting them anymore!

There will be shortages almost immediately.

Until recently, the US Mint pumped over 7 billion new pennies a year into circulation. Once the decision was made to kill the penny, the mint stopped buying blanks and just minted what they had on hand. 14 billion over 4 years, a 50% reduction.

Banks have generally stopped taking orders for pennies from businesses because the banks can't order them from the mint.

Using Canada as a model for what happened, the penny very quickly stopped showing up in people's pockets and used in transactions after it was discontinued.

From ChatGPT:

Key dates​

• March 29, 2012 – The Royal Canadian Mint struck the last penny.
• February 4, 2013 – The penny was officially withdrawn from circulation.

How fast did people stop using it?​

Almost immediately after early 2013, pennies largely disappeared from day-to-day transactions:

• Retailers stopped giving pennies as change right away once withdrawal began.
• Cash transactions began using rounding to the nearest 5 cents, which became standard nationwide.
• Many stores refused pennies within weeks or months, even though they technically remained legal tender.
• Banks and businesses actively pulled pennies out of circulation, accelerating their disappearance.

Real-world usage​

• By mid-2013, pennies were rarely seen in everyday commerce.
• By 2014, they were effectively gone from routine use, except for:
  • People emptying old jars
  • Coin collectors
  • Occasional novelty or nostalgia uses
    

Why it vanished so fast​

• No need for them once rounding was introduced
• Businesses didn’t want the handling/storage cost
• Public acceptance was high (polls showed broad support)
• Banks provided a clear path to return and remove them

The US is of course not Canada. The big difference will be:

• Public acceptance was high (polls showed broad support)

The US probably has more people who will see this as a hill to die on and continue to use pennies no matter how inconvenient for them and for retailers.

 

[_19disnA]

When paying in cash, our local grocery store rounds your TOTAL purchase (not individual items) up/down to figure what you owe. If the TOTAL is between $xxx.01 and $xxx.04 they round it down to $xxx.00. Between .06 to .09 gets rounded up. If paying by credit/debit card, nothing changes.

 

[dizneegirl]

When paying in cash, our local grocery store rounds your TOTAL purchase (not individual items) up/down to figure what you owe.

Well, of course it would be on the total, not individual items.

 

[disneychrista]

A question a friend asked was will stores still accept penny's for cash transactions if they are no longer giving penny's as change? Stores have the right to refuse specific tender, as is the case with $50 & $100 bills, will they also refuse penny's?

 

[sam_gordon]

A question a friend asked was will stores still accept penny's for cash transactions if they are no longer giving penny's as change? Stores have the right to refuse specific tender, as is the case with $50 & $100 bills, will they also refuse penny's?

Maybe in a while, but not in the short term. Just my WAG.

 

[Genie+]

I went to make a return yesterday on a coat and shoes from TJmaxx that were $69.99 and $49.99 that I had paid cash. It was so nice to get all bills back and NOT 98 cents in change. After that I picked up a few groceries. That bill came to $78.98. I put $80 in the self checkout machine and got a dollar bill back. Fine! I’d really rather not take those 2 pennies anyway.

It was such a noticeably nicer experience without the pennies when dealing with cash.

 

[RedAngie]

Well, of course it would be on the total, not individual items.

According to whining posts elsewhere, many people mistakenly believe that each individual item in a single larger transaction will be rounded UP to the nearest 5 cent increment.

 

[dizneegirl]

According to whining posts elsewhere, many people mistakenly believe that each individual item in a single larger transaction will be rounded UP to the nearest 5 cent increment.

Well that level of misunderstanding is frightening...

 

[tvguy]

I have two sandwich bags full of pennies so I don't expect it will have any impact on me anytime soon.
Time will tell. I have not seen a business in Northern California.....or Southern California where I am frequently, that did not still have pennies.
The comparisons to Canada are interesting. I don't know if the Government in Canada refused to budge on phasing out paper $1 bills. But in the U.S., the people resoundingly said no to $1 coins and the Government blinked. Remember, the U.S. Government had Walmart giving change in dollar coins to try and help mainstream coins. But they would give you paper $1 bills if you did not want coins, and apparently enough people said no thanks to the coins that Walmart stopped giving them out years ago. Even banks don't carry dollar coins, if you want them, they have to order the.

 

[hardcorestitch]

My understanding is if you use a card, nothing changes. You still pay the regular amount.

If you use cash, the store decides how it will handle it. So if the cost is 19.97, and you hand in a $20 bill, the store will either give you a nickel or you're "out" the three cents.

I believe the thought is it will "even out" the more you purchase things. So maybe at store #1, they keep your three cents, but at store #2, you get a nickel back.

Just a guess though.

That’s a price gouge just waiting to happen…

 

[sam_gordon]

That’s a price gouge just waiting to happen…

How do you figure? Canada does exactly that (as explained in this thread).