If you’ve ventured inside a convenience store recently, you might have noticed signs
asking for exact change only, or even offering to buy your change.
That’s because America is currently undergoing a coin shortage, or more accurately,
a “circulation disruption.”
Thanks to COVID-19, people aren’t using as much cash, and aren’t redeeming coins
at places like banks and grocery stores.
That means a lot of coins just sitting in homes in jars and piggy banks, not being used.
That may not sound like a big deal if you buy everything online, but millions of “unbanked”
Americans rely on cash to get by, and many services, like coin-operated laundromats,
have no other payment options.
This is likely to persist until people start using coins freely again, so we thought it
was the perfect time to premiere this episode we shot before the pandemic struck about the
importance of your loose change.
Enjoy!
If you’ve ever used a five dollar bill to buy something that costs $4 and one cent,
you might have felt conflicted about that handful of coins you received in change.
Coins that will either be jangling in your pocket all day, cluttering up your car or
slipping between your sofa cushions.
You know it’s money--it’s worth something--but maybe less than the trouble of holding onto
it.
How did we get to the point where legal tender could be considered a burden?
Will things ever change?
And until then, what should you do with that change?
You’re probably aware that pennies didn’t start out worthless.
In 1913, they had roughly the purchasing power of today’s quarters.
A handful of them could’ve bought you a quart of milk or a bite to eat.
But after a hundred years of inflation, today’s pennies and nickels are worth less than it
costs to make them!
No rational government would intentionally start minting coins with so little value,
yet we seem to be stuck with them for the time being.
Why is that?
Again, inflation is one of the culprits--or rather, the fear of inflation.
Thanks to America’s weird pricing practices, it’s common to see numbers like these at
checkout.
Many people assume that if we eliminate the penny, retailers will round up their prices
to the nearest nickel.
Doesn’t seem like such a big deal when you’re grabbing a soda from 7-11, but some economists
fear that if all the prices on all the goods across the whole country go up at the same
time, it could kickstart a spike in inflation.
Others have conducted studies that suggest this fear is overblown.
Sentimentality is a much more likely reason.
Most Americans are against eliminating the penny, and 43% said they’d be “disappointed”
or “angry” if they were discontinued.
Without overwhelming popular support, it’s unlikely that Congress will abolish such an
iconic element of American history, so U.S. mints continue to roll out around 10 billion
pennies a year, more than all the other coins combined.
Why so many?
In part, because so many disappear--into couch cushions, junk drawers, fountains, and landfills.
Americans throw away over $60 million worth of coins every year!
11% of people said they’d rather throw a penny into the trash than hang on to it.
Don’t do that.
I know a penny isn’t worth much, but there are far better places to put them.
Like piggy banks!
Not to get off on a tangent, but what’s the deal with piggy banks anyway?
It’s not like pigs are known for their frugality and restraint, so what gives?
Thank you for that spontaneous and not-at-all pre-planned question!
The origins of the piggy bank are unclear, but the dominant theory is that in the Middle
Ages, people would keep coins in jars made out of a clay called “pygg”.
Over the next few hundred years, the vowel sound shifted from uh to ih, making the word
similar to the Middle English word for swine, “pigge.”
By the 18th century, potters were making pygg jars in the shape of pigs as a kind of visual
pun, and boy did it catch on.
Unfortunately, not many of these original piggy banks are around today, because you
have to, y’know, smash ‘em to get your money out.
However, there is a surviving cousin of the piggy bank: a clay vessel filled with hot
water that people still use in certain places to warm their beds, sometimes called a “pig.”
So once your piggy bank is full, what should you do with all those pennies, nickels and dimes?
Unless you want to be the most unpopular person at your supermarket, we don’t recommend
using them for big purchases.
Instead, you could pour them into one of those machines they often have near the entrance,
which automatically sift and sort your change and print out a receipt you can redeem with the cashier.
The catch?
They typically charge a processing fee over 10%, which is kind of a lot to turn money
into… money.
Most coin machines will allow you to skip the fee by putting the value on a gift card
instead--which is great if it’s for a place where you know you’ll spend anyway.
They also allow you to automatically donate the money to one of several charities--which
has got to be one of the most painless ways to be generous.
Just make sure to keep that receipt for your taxes!
Maybe you’d prefer to try your local bank, but be warned: the federal government does
not require banks to accept coins.
It’s totally up to the institution, and will often depend on whether you have an account
there, whether the coins are rolled, and even how busy they are--and many banks are starting
to charge fees for processing coins.
It’s best to call ahead before you load those buckets into the trunk of your car.
Perhaps the best use for loose change is giving it to children!
It’s worth a lot more to them than it is to adults, it can be used as a reward for
desirable behavior, teach them about math and economics, and introduce them to the pride
of saving when it’s finally redeemed.
Just remember to keep a little change for yourself, because one of the best uses for
it… is to avoid collecting more!
With just 1 nickel, 2 dimes, 3 quarters and 4 pennies, you can nail any number that comes
after that decimal point.
So if you don’t want to accumulate any more change than you already have, just grab 1
2 3 4 on your way out the door.
In the era of credit cards and payment apps, it’s easy to start seeing loose change as
worthless, but there’s a danger to this way of thinking.
If you start internalizing the idea that a $1.55 bottle of soda costs $2 in cash, you’re
basically acquiescing to a 30% price increase.
Over thousands of transactions, that can add up.
If that’s not enough motivation, consider using those savings to treat yourself to something
fun or frivolous.
Since we tend to think of loose change as “valueless,” there’s less guilt in spending it.
It doesn’t look like pennies and nickels are going anywhere for a while, so whether
you put it in a piggy bank, donate it to charity or give it to your kids as an allowance, anything’s
better than throwing it away.
But maybe get one of those piggy banks with the stopper, just in case you get too emotionally
attached to send him to hog heaven.
And that’s our two cents!
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