cost to make a penny

Why Is The US Mint Still Making Pennies?

by Tim on December 5, 2011

Have you ever heard that it costs more to make a penny than it’s worth?  That’s actually true!

According to the US Currency budget report, the increase in the price for base metals (copper, nickel and zinc) climbed from five-year lows, reaching near record highs.

What’s all this mean?

It means that the cost to make pennies and other coins has increased significantly.  Just take a look at the increase in the cost of the base metals from 2009 to 2010.

  • Copper – Up 56.9%
  • Zinc   –    Up 52.4%
  • Nickel –  Up 55.8%

These spikes in base metal costs caused the unit cost of coins to increase as well.

The 2010 figures are the most recent provided by the US Mint budget.

The cost to produce a penny: $0.0179

The cost to produce a nickel: $0.0922

The cost to make a penny and a nickel are a little over eleven cents for the two of them.  That’s right, the US Mint pays $0.11 to creat $0.06 worth of money when they stamp out a penny and a nickel.  That math doesn’t add up…  If the costs of these metals continue to increase, it’s only a matter of time until a decision is made to cut these coins.

What do you think?  Should we continue to create the penny and nickel even though the US Mint loses money on them?

{ 5 comments… read them below or add one }

Carrie Smith December 5, 2011

I was just thinking about this yesterday, while I watched a short YouTube video called “Death to Pennies”. I completely agree that it costs more to manufacture pennies and they are completely useless in the economy. No one really uses them, and they just sit in jars or small piggy banks until we cash them in a year later.

Imagine how much money the US Mint could save by not making pennies anymore. And how much more convenient it would be for consumers. I think they will realize this quickly, because you can only go on for so long, losing money.


Eric December 5, 2011

Cutting pennies would cause instant economy wide inflation. Because I doubt anyone would round down, any cost that ends in a number other than 0 or 5 would be rounded up to the next denomination.

If we stopped having pennies, would electronic transactions, checks, and interest all have to rounded up or down as well? I don’t think pennies will go away for a long time.

However, it would be smart for the Mint to change the composition of pennies and nickels to save on the production cost.

What we really need to do is get rid of paper dollar bills and use dollar coins (and maybe $2 coins) in their place. That could save billions!


Jill Pruett December 9, 2011

Any chance we do like Australia did? the government abolished 1 cent coins; when you pay cash any change is rounded up or down to the nearest 5¢. Checks/credit cards and any other electronic payments function as usual.

My husband and I recently took a month-long trip through Australia, and I noticed this on a lot of my receipts. As I pay cash for most everything that is a face to face transaction, I ended up with a lot of cash register dockets with “rounding adj” as the last entry!


Trisha Cupra December 16, 2011

I find it really amusing that the US still uses pennies. Here in Australia we got rid of 2 cent and 1 cent coins in 1992. I was 11 years old. I only barely remember it.

I also find it funny that you use paper money – our notes have been made out of plastic since 1996. They are a lot hardier – even surviving being left in a pocket and going through the washing machine (talk about money laundering…).

You guys are seriously behind the times… :)


Marie at FamilyMoneyValues January 30, 2012

I hate pennies, but since I am a cash buyer most of the time, I would hate to have to round up!


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