The End of an Era: The U.S. Penny Says Goodbye

The End of an Era: The U.S. Penny Says Goodbye

After more than 230 years in circulation, the U.S. penny has officially reached the end of its journey. On November 12, 2025, the Philadelphia Mint produced the final batch of pennies, marking a historic moment in American currency.

Why Retire the Penny?

The decision was driven by economics and practicality:

• Cost Over Value: Each penny costs 3.69 cents to produce, creating an annual loss of nearly $85 million for the U.S. Mint.
• Digital Dominance: With cash transactions declining and digital payments on the rise, pennies have become increasingly irrelevant.
• Budget Savings: Ending production will save taxpayers about $56 million per year.

Fun Facts About the Penny

• First minted in 1793, designed by Benjamin Franklin as the “Fugio cent” with the motto “Mind Your Business.”
• Abraham Lincoln became the first real person on U.S. coinage in 1909.
• During World War II, pennies were made of zinc-coated steel to conserve copper.
• Today’s penny is 97.5% zinc and 2.5% copper plating.

What Happens Next?

Existing pennies remain legal tender, but no new ones will be made. Cash transactions will likely be rounded to the nearest five cents, similar to Canada and Australia. Economists predict minimal inflation, though rounding up could cost consumers about $6 million annually.

Retailers may need to adjust pricing strategies, and collectors will see a surge in interest for rare pennies and the final minted coins.

A Cultural Farewell

The penny has been more than currency—it’s a symbol of thrift and tradition. From sayings like “A penny saved is a penny earned” to lucky pennies in our pockets, its legacy will endure even as we move toward a cashless future.

What Businesses Need to Do

With the penny gone, businesses should prepare for operational changes:

• Decide whether to round up or down for cash transactions. Many businesses adopt “round to nearest nickel” rules.
• Communicate rounding policies clearly at checkout to avoid confusion.

• Ensure employees understand new procedures for handling cash payments.
• Provide scripts for explaining rounding to customers.

• Update point-of-sale software to handle rounding automatically.
• Verify tax calculations remain accurate after rounding.

• Use signage and social media to inform customers about the change.
• Emphasize that digital payments remain exact, encouraging electronic transactions.

• For businesses with fixed-price agreements, confirm how rounding will apply.
• Consider promotional strategies to offset perceived rounding losses.

Here’s how the end of penny production affects banks and interest calculations:

Impact on Banks

• Banks can no longer order new pennies from the Federal Reserve; they will only accept deposits of existing pennies until inventories run out.
• Many Fed coin terminals have already stopped handling pennies, creating regional shortages and logistical challenges for banks and armored carriers. [kcci.com], [icba.org]
• Banks must update cash handling policies, coin inventory management, and customer communication strategies. [aba.com]

• Banks will need to explain rounding practices for cash transactions and help businesses adapt.
• Community banks are particularly affected because they serve cash-heavy customers and small businesses. [icba.org]

• No federal rounding standard exists yet, and some states prohibit rounding up. Banks and retailers risk legal issues if they apply inconsistent rounding rules. [pwc.com]

Effect on Interest Calculations

• Digital Transactions Unchanged: Interest on savings, loans, and deposits is calculated electronically to the exact cent, so the penny’s removal does not affect interest accrual or APY calculations.
• Cash-Only Accounts: For accounts involving physical cash deposits (e.g., coin-heavy businesses), rounding may slightly affect balances when pennies are unavailable, but this is negligible compared to electronic transactions. [hffinancial.com]
• Accounting Systems: Banks must ensure their systems handle rounding for cash transactions without impacting ledger integrity or reconciliation. [pwc.com]

Broader Banking Implications

• Shift Toward Digital Payments: The penny’s end accelerates the move to cashless transactions, reducing coin processing costs for banks.
• Operational Savings: Banks save time and labor previously spent on penny counting and rolling, but must invest in system updates and staff training. [thefinanci…lbrand.com]
• Liquidity Awareness: The phase-out highlights vulnerabilities in physical currency circulation—banks need contingency plans for other denominations if similar changes occur. [thefinanci…lbrand.com]

Bottom Line

For banks, the penny’s elimination is mostly an operational and compliance challenge, not a financial one. Interest calculations remain unaffected, but cash handling and customer communication require immediate attention.