How much are pennies worth to banks? As the U.S. government stops minting the one-cent coins, experts say the industry could feel the impact in a number of ways.
The potential side effects range from
President Donald Trump called for the end of penny production in February, and the Treasury Department put in its last order for blank pennies in May. Once that supply runs out in early 2026, the U.S. Mint plans to stop making the coins.
The rationale is a matter of cost. Each penny costs about 3.7 cents to make, nearly four times its value. The Treasury has estimated that by no longer producing the coins, the government will save $56 million per year — not an insignificant sum, but only a tiny fraction of the federal government's
"The cost savings are probably not that huge," said Bill Maurer, director of the Institute for Money, Technology and Financial Inclusion at the University of California, Irvine. "The real implications are consumer-side and merchant-side."
Pennies are not about to disappear. With 114 billion of the coins still in circulation, Americans are unlikely to run out of them any time soon. And at least so far, Trump has only ordered a halt to the production of new pennies — not the demonetization of existing ones.
"There's tens of billions of pennies out there that are sitting in people's homes," said Kevin McColly, the CEO of Coinstar, a company that operates coin cashing machines at banks and other locations. "I'm quite confident we don't need to ever produce another penny again."
But even assuming there won't be a shortage, banks could face some short-term effects. If consumers mistakenly think pennies are being demonetized, there's a risk they could make a mad dash to roll up the coins and deposit them before it's too late.
"There may be a rush of people bringing their pennies in, even though they don't have to, and then banks will have to deal with that temporary uptick in processing coin sleeves," Maurer said.
Meanwhile, some banks and credit unions might have the opposite reaction from consumers: Out of fear of a dwindling penny supply, they may stock up on the coins to keep up with demand from retailers.
The possibility of a coin shortage is not just hypothetical. Early in the COVID-19 pandemic, coins
Robert Norman, the head of cash logistics strategy at Fifth Third Bank, believes such banks went too far during the pandemic — and he worries the same thing could happen again.
"To us, the biggest concern would be if folks start to hoard," Norman said. "We're hopeful that that doesn't become the situation with the pennies."
Fifth Third, which does a great deal of business with retailers, is committed to keeping its coin supply steady, Norman said. But if competitors start hoarding pennies, there's a risk that banks like his could run short.
"We want to be able to continue to supply it as long as we can get it. But if we run out, but yet other banks still have it, that's not going to show good on us," Norman said. "So we would hope that the natural process of it slowing down would happen, and not because people are retaining it in their vaults."
There's also a longer-term concern. If phasing out the penny represents one more step toward a cashless society, many lower-income Americans could be left behind. More than 4% of U.S. households lack a bank account,
If, over time, pennies become so rare that retailers stop using them, UC Irvine's Maurer worries that stores could start setting two prices: one for "banked" Americans and another for the "unbanked."
"When everything is all added up, and you're at the checkout, they're going to round up to the nearest five cents if you're paying in cash," Maurer said. "If you're paying with a card or with your phone, they'll just charge you whatever the actual total is."
Americans without bank accounts would face a double financial hit: Buying things would become more difficult as fewer stores accept cash. And at the stores that do, the "rounding up" effect would gradually add significant costs.
Norman expressed concern about this population as well, emphasizing that Fifth Third opposes the demonetization of pennies for that reason.
"That's why we're pro-cash," Norman said. "We as a bank are very committed to our communities and supporting our communities for all payment options that they choose to use."
From Coinstar's perspective, stopping penny production sounds like a "great plan," McColly said. But leaders in Washington should carefully plan what comes next, in order to avoid disruptions to circulation or disadvantaging certain groups, he added.
"The penny seems like a small thing, but it's that slippery slope of kicking off this avalanche of not allowing cash," McColly said. "I — and I think most politicians — want to avoid that."
Will pennies still be accepted after 2026?
Yes. The Trump administration’s plan is to stop producing new pennies but not to demonetize the ones already in circulation. Existing pennies will keep their value and can be used to make purchases or payments.
