Does it make sense to stop making cents?

During the 2025 Super Bowl, President Trump announced on social media that the United States would stop production of the penny. The decision reignited a longstanding debate over the nation’s lowest-valued currency and brought its problems to the forefront.

Jeffrey Nowakowski, foreign exchange sales specialist at BOK Financial® agrees the time has come, and he’s not alone.

The penny paradox
Dating back to the 1970s, Treasury secretaries have been trying to explain the penny paradox to Congress in a bid to convince them the coin should be discontinued. Pennies are primarily used for the purpose of making change during cash transactions.

However, when pennies are misplaced or people choose not to recirculate them for other reasons, the U.S. Mint must then make more pennies to replace the coins. If these replacement pennies are not spent themselves, they will need to be replaced with new pennies, creating the largest catch-22 in modern currency history.

The rising cost of penny production
The continuation of minting pennies has been in debate for years, mostly because since 2005 it has cost more than 1 cent to make a penny. “As of 2024, the cost to produce a single penny had escalated to 3.7 cents, far exceeding its face value,” said Nowakowski. According to the U.S. Mint’s Annual Report, it lost $85 million dollars making pennies, but actually turned a profit overall.

The production costs are influenced by the prices of raw materials, particularly zinc, which is 97.5% of the coin's composition. The remaining 2.5% is copper. The U.S. Mint also takes a hit making nickels, which cost 13.8 cents to create. Dimes and quarters are more economical, with production costs below their face value.

And yet, public opinion on the penny is split. Some surveys show support for keeping the penny around while others say it’s time to say “sayonara” to the cent.

Support for eliminating the penny
According to Nowakowski, inflation has risen several hundred percent since the first penny was minted in 1793, rendering it nearly useless. He also highlights potential time savings.

“The process of storing, transporting, handling and wrapping pennies is time consuming for both banks and retailers. It slows down transactions wherever pennies are used,” he said. He also points out other countries like Canada, Australia and New Zealand have successfully phased out their lowest-denomination coins without adverse effects. Even the U.S. successfully phased out a half cent in 1857, suggesting a similar transition could be smooth in 2025.

Opposition to the decision
Despite the financial rationale, some would like to push pause on eliminating the penny. Nowakowski points out that since transactions would now be rounded to the nearest five cents, more nickels would be needed. Since the nickel's production cost is also above its face value, increased nickel production could offset any savings to the country from discontinuing the penny.

And we can’t rule out nostalgia, he said. There are sentimental and historical attachments to the penny.

“The penny holds cultural significance for many Americans. Coin collectors and enthusiasts view the penny as a tangible link to the nation's history, and its elimination could be seen as a loss of heritage,” said Nowakowski.

Implications for consumers
The transition would require public education and updates to point-of-sale systems to handle rounding rules, but Nowakowski thinks the removal of the penny would have minimal impact on consumers if handled correctly.

“Transactions would merely round to the nearest nickel, meaning some transactions would increase slightly while others would decrease slightly. The net effect would be negligible,” he said.

However, others have concerns. Organizations like Americans for Common Cents, argue that removing the penny could lead to increased costs for consumers if clear direction isn’t provided on rounding, which would disproportionately affect low-income individuals who rely more on cash transactions. Electronic transactions, which constitute a growing share of purchases, would remain unaffected, as they can be processed to the exact cent.

President Trump's directive to halt penny production brings to the forefront a debate that encompasses economic efficiency, consumer impact and cultural values. The U.S. Mint has not put out any official statement on the matter yet.