Good bye Ms. Penny

Well today is the day – the slow death of the Canadian penny.

As of today, any pennies that the government retrieves will probably be melted down. Banks themselves will cease to distribute them. [Of course a question is what is done when someone cashes in a cheque that includes pennies.]

With billions in circulation [as well as hording], and the penny costs more to make than the face cost, the Canadian government decided last year to kill the penny.

It started mid-last year when the last of the pennies were made and then the “presses” stopped. [If I am not mistaken, the last batch will be kept out of circulation for various purposes.]

The savings to the government is [I believe] under $15 million a year. Doesn’t sound like much but that’s about 150 million pennies plus the cost to manufacture and distribute.

Now what does it mean to the consumer.

If you are paying by anything but cash, you will still be paying the full amount. So if your new car’s final bill is $18,721.97 – that’s what you will pay by cheque, credit card, debit card, etc.

Now if you pay by cash, it depends on what the final bill is after tax.

If your final bill ends in 1 or 2 [i.e. $3.21, $76.92], the bill rounds down to 0 [i.e. $3.20, $76.92 respectively].

If your final bill ends in 3 or 4 [i.e. $8.33, $121.74], the bill rounds up to 5 [i.e. $8.35, $121.75 respectively].

If your bill ends in 0 or 5, there is no change in what you pay.

If your final bill ends in 6 or 7 [i.e. $3.26, $76.97], the bill rounds down to 5 [i.e. $3.25, $76.95 respectively].

If your final bill ends in 8 or 9 [i.e. $8.38, $121.79], the bill rounds up to 0 [i.e. $8.40, $121.80 respectively].

So if you bought that car by cash [assuming, law enforcement doesn’t take notice], your final bill is $18,722.00.

Now according to The Canadian Mint, they call it a “guideline”. So, theoretically a store my charge you $8.75 if your bill [after tax] was $8.71. But this will hopefully be unlikely. The rounding is just guidelines. Businesses do not have to follow The Canadian Mint guidelines.

The guidelines from The Canadian Mint, “that has been used successfully by other countries “, were basically duplicated from other countries that killed their own penny, 1 pesos, etc.

[PS – I wonder how many US pennies are in circulation.]

Update: Funny cartoon at http://www.montrealgazette.com/opinion/editorial-cartoons/7911923.bin?size=620×400

Update: Roughly only 20% use cash to pay for purchases.

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About ebraiter
computer guy

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