The Humble Coin: A Call to Rediscover Lost Value and Rethink Our Relationship with Pocket Change
We live in an increasingly cashless society. Swipe, tap, and click reign supreme. Digital wallets and contactless payments have become ubiquitous. Amidst this technological shift, the humble coin often finds itself relegated to the bottom of purses, the depths of car consoles, and forgotten jars gathering dust in closets. Yet, according to Kevin McColly, CEO of Coinstar, we’re missing out. He believes it’s time to "learn to love our coins."
The statistics paint a clear picture. In 2023, cash accounted for a mere 16% of consumer payments in the United States, as reported by the Federal Reserve. A 2022 Pew survey revealed an even more striking trend: two out of five Americans never use cash at all. This decline in cash usage has led many to view coins, particularly pennies and nickels, as more of a nuisance than a valuable form of currency.
The situation is further complicated by the fact that producing these coins actually costs more than their face value. Former President Trump even ordered the Treasury to cease the minting of pennies due to these economic realities. A similar situation exists with the nickel. Consequently, many Americans perceive these coins as insignificant and readily discard them or allow them to accumulate unused.
The Federal Reserve estimates that the typical American household possesses between $60 and $90 in neglected coins, enough to fill one or two pint-sized beer mugs. This represents a significant amount of potential spending power that is simply lying dormant. Millions of dollars in coins are thrown away annually, essentially treated as trash, highlighting a widespread undervaluing of this tangible currency.
McColly argues for a paradigm shift in how we perceive coins. He emphasizes the fundamental truth that coins are, in fact, money. Coinstar converts $3 billion worth of coins into spendable cash each year, one coin jar at a time. The average jar yields a surprising $58 in buying power. He points out that most people underestimate the value of their coin collections, often by as much as half. Cashing in these forgotten treasures can be a surprisingly rewarding experience, giving people the sensation of "found money."
While the trend towards cashless transactions is undeniable, certain demographic groups continue to rely heavily on cash. Lower-income households, individuals over the age of 55, and those who prefer in-person shopping tend to use cash more frequently, according to the Federal Reserve. This highlights the continuing importance of cash and coins for a significant portion of the population.
McColly encourages everyone to reconsider their relationship with coins. Instead of viewing them as clutter, he suggests thinking of them as recyclables. "They’re metal," he reminds us, underscoring their inherent value as a resource. These coins have a "long and useful life," he adds, emphasizing their potential for continued circulation within the economy.
Despite the rise of digital payments, the Treasury still mints billions of coins each year, even though the figure is gradually decreasing. McColly argues that if Americans collectively gathered their idle coins and "recycled" them back into the monetary system, the need for newly minted coins would be significantly reduced, conserving valuable natural resources such as copper-plated zinc for pennies and copper-nickel alloys for nickels, dimes, and quarters.
It’s important to acknowledge that Coinstar benefits directly from coin redemption, collecting a small fee for its services. However, Kimberly Palmer, a personal finance expert at NerdWallet, points out that consumers can avoid these fees by exchanging their coins at their bank or credit union. NerdWallet and Bankrate both offer helpful tip sheets on how to exchange coins for cash, advising account holders to check with their banks about potential fees and whether they need to roll the coins themselves.
Despite the potential effort involved in sorting and rolling coins, Palmer believes that "a lot of people probably do have hidden coins stashed around their home, and it can be worth their time to go and collect them." McColly also notes that Coinstar often waives its fees if customers choose to receive a retail gift card in exchange for their coins, providing an alternative option for utilizing their accumulated change.
The debate surrounding the future of coins extends beyond mere convenience. Ted Rossman, a senior industry analyst at Bankrate, notes that the United States has been slower than other regions, such as parts of Europe and Asia, to fully embrace mobile payments and contactless credit cards. The COVID-19 pandemic served as a stark reminder of our continued reliance on cash when the global shutdown disrupted the flow of coins, leading to an actual coin shortage. "It kind of froze the whole system," Rossman explains.
While the Trump administration only directed the Mint to halt penny production, some voices advocate for the complete elimination of the penny. The Common Cents Act, introduced by a bipartisan group of lawmakers, proposes rounding cash transactions to the nearest five cents. Supporters of this legislation, like Senator Kirsten Gillibrand, argue that "the penny is outdated and inefficient and no longer serves the needs of our economy."
However, eliminating the penny raises a series of complex questions. As the New York Times mused in a headline, "So, You Want to Get Rid of the Penny… Do You Have a Plan for the Nickel?" The removal of the penny could lead to an overabundance of nickels, creating new challenges.
The government loses money on the production of both pennies and nickels. Each penny costs nearly three cents to mint, while each nickel costs nearly nine cents. Eliminating the penny could inadvertently exacerbate the losses associated with nickel production.
The prospect of abolishing both the penny and the nickel raises further questions about how consumers would handle transactions that are not divisible by ten cents. Would prices be rounded to the nearest ten cents, as suggested by extending the Common Cents Act? And if so, what would become of the quarter? The issue underscores the interconnectedness of the monetary system and the potential ripple effects of even seemingly minor changes. Ultimately, the future of coins in America remains uncertain, but the debate highlights the importance of understanding their value, both economic and symbolic, and of carefully considering the potential consequences of any proposed changes to our monetary system.
