Why It's Time To Kill The Five Cent Coin

It's near-impossible to use, it takes up space in your wallet, and it might soon cost more to manufacture than its actual face value. It's time for Australia to get rid of the five cent coin.

The topic of what to do with loose change is one which we visit quite frequently here at Lifehacker. We've covered many of the obvious strategies: use the coins in vending machines; make occasional trips to the bank to change everything over; keep them in your car to pay tolls; put them into self-service supermarket checkouts; take time to pay for things exactly so that you get less change in the first place.

Many of these strategies fail when faced with our smallest unit of physical currency: the five cent piece. Vending machines often won't take them in the first place, the coins take ages to collate but still aren't worth very much, and there is pretty much nothing left in Australia that you can purchase for five cents. You can give any shop up to $5 in 5 cent pieces and they're not legally allowed to refuse it, but if you try that with your local coffee shop too often I bet someone will end up sneezing in your latte.

As a confirmed clutter hater, I was extremely happy when we ditched the one and two cent pieces in 1991, and 20 years later I can see an even better case for ditching the five cent equivalent. Quite aside from the fact that we're increasingly favouring paying by electronic means in many cases anywhere, it looks like five cent pieces might actually cost us more to produce than their face value.

In a piece in yesterday's Australian Financial Review (which I can't link to because of that paper's paywall policy), Jason Murphy notes that the 0.7g of nickel and 2.1g of copper used in each five cent piece is in itself worth 3.6 cents at current prices. Add to that the manufacturing and handling costs, and this already looks like a coin that is costing us money. Despite that, the Australian Mint produces an average of 160 million new five cent pieces each year, and the total value of five cent pieces on the market is estimated as $198 million.

As far as I'm concerned, that's $198 million that could be better deployed as other types of currency. New Zealand ditched its five cent piece in 2006; it's time to emulate our Kiwi neighbours and cut down on coin clutter.

Lifehacker's weekly Loaded column looks at better ways to manage (and stop worrying about) your money.


Comments

    Kill that coin.

    It's too small to do coin tricks with and you can't stack them to make impressive bridges. As far as I'm concerned, the 5c coin is nothing more than filler in my coin jar.

    So anything thats 5c or more gets rounded up to 10c if paying by cash.

    I remember when the rounding for 1 and 2c were phased out and it caused such a bruhaha whoever does it will cop a lot of flak from the public about it (rightly or wrongly)

      Although we all understand the rounding rules, when it comes to money (technically) its suppose to always round down.
      If an item costs $1.98 a shop can not charge you $2 for it, otherwise they are charging you more than the marked/advertised price. . . which isnt allowed.

        That is actually incorrect, $1.98 is rounded up to $2.00 if paying by cash, and it is the correct method, not illegal in any way.

        My kids still use 5c pieces at the pool to purchase the occasional lolly. The US is still pressing pennies!

        You are actually incorrect, the rule is $1.98 rounds up, $1.97 rounds down, always has been.

        In this case $1.95 will round down to $1.90, $1.96 will round up to $2.00

          I'm pretty sure $1.95 would be rounded up to $2 if you follow the normal mathematical rounding conventions.

        Like I said. . .
        We all understand the rounding rules, but when it comes to retail a store can not charge more than the marked price.

          It's a myth that stores can't charge more than the marked price on an individual item. If it were true then anyone could sneakily switch prices around on items in the store and other customers could benefit and the store would have to wear it. It's well established in law that your contract with the store happens at the cash register, not when you pick up the item off the shelf. Now, that doesn't mean that shops are allowed to systematically advertise incorrect prices for bait and switch but the rules brought in for rounding are accepted to be understood by consumers and therefore don't fall into that category.

    This'd be good. I've almost run out of 1 and 2 cent pieces to use for poker money.

    They should fix the production, not kill the coin. I have fondness for the 5cent. Besides, I'd hate having to round to the next 10 cent. Budgetary issues!

    Plus, what about all those kid's fund-raisers that collect 5c pieces?

    There's no need to get rid of it. The coin is tiny, light and easily disposed of. My personal preference is to dump almost all my coinage into my giant coin tin - one of those that you have to open with a can opener - and keep a few on hand for exact change.

    What we should really follow NZ on is shrinking the size of our coins, the 20 and 50 cent coins are absolutely massive.

    I don't get the argument about rounding, everything sold in supermakets is 98/99 cents, you hardly ever get things that end in 5 cents, and even then, in NZ the retailers rounded down at 5.

    Having a coin cost more to mint than its face value is nothing new. On a trip to the US mint in Philly I think they told us that their 1c & 5c had been like that since 2005-6.

    Price fluctuations in metal are not a good benchmark for saying yes/no to minting however, do we restart minting them if the price drops?

    If we remove the 5c from circulation you would expect we will need a larger supply of 10c, a coin that has the same metal makeup percantages as the 5c and is exactly twice the mass. If we say that the mint can make them for the same cost per unit as a 5c, shipping per unit is more expensive given the greater weight. In a worst case we may "lose" more money making more heavier coins than we "gain" by dropping a smaller, lighter one.

    Also it is illegal in the US to melt down currency yourself for the metals and it probably is in Australia too.

    You might enjoy this "I hate pennies" video from the US:

    http://www.youtube.com/watch?v=77C47XYm_3c

    I disagree. The 5 cent coin is just fine they way it is. I recently took a trip to America where I found the 1 cent coin to be the most annoying coin of all. My wallet was always extremely heavy from the excess change. With the 5 cent coin I never have this issue. As for vending machines not accepting 5 cent pieces I've not had a problem with all the vending machines at my work providing the complete sale from 5 cents to 5 dollars :)

    It's time for it to go. Actually, it was time five or six years ago. Most machines don't accept them. You havne't been able to pay tolls with them for years, no trains, no coca colas.

    And to counter @TrendyTim's argument above, most prices at retail (outside of supermarkets) are multiples of 10c anyway. Don't think anyone would notice a difference to their purchasing power because of rounding.

    As I have suggested elsewhere, kill the 5 and the 20 and replace them with a 25..
    That way you get to keep a 5c pricepoint but you don't have to deal with 5c coins!

      Really? You can keep 5c pricepoint?

      Imagine buying an 85c item with a $1 coin. Now make change without a 5c piece.

      It doesn't work.

        Yeah that wouldn't work, but pay with $1.10, I'll give you a 25c as change.. Easy!
        5c coins suck. Frankly, I'd happily have everything rounded to 10c, but if we need to keep 5c as a price point, the 25c coin keeps that as an option.

          That's just way beyond the level of ability for your average wage slave check-out-chick/dude. "Quarters" must be one of the most stupid ideas for a base 10 currency system.

          Stuff cash - I pay by card almost exclusively nowadays anyway, and curse the luddite businesses that still bother to demand cash only.

          Whaaat? Saying that you need to pay $1.10 is fine, but what if you only have $1 on you? The store would have absolutely no way to give you change.

    I wish that New Zealand had managed to get Australia to remove and downsize its coins at the same time in 2006.

    It was great getting rid of the 5c coin in NZ, and then shrinking the 10,20 and 50c. As the 50c size NZ used (and Australia still uses) is far too heavy and massive.

    If Australia got rid of the 5, then shrunk the 10,20 and 50 to match NZ (maybe keeping the odd shape of the 50c), as it used to be great being able to share currency between the countries. And one day in the future there will be a combined ANZ dollar.

    The changeover was easy in NZ, 0,1,2,3,4 round down, and 5,6,7,8,9 up. You win on some items, lose on others. Plus with the prevalence of EFTPOS systems rounding barely even matters.

    It only took 3 months for the old coins to be removed from circulation as well.

      2014, post- next federal election.
      minority governments do not change a pensioner's coin.

      Hey, last I checked it's 2011 right?? today alone I got two NZ pre-change coins. NZ may have changed but Oz is still firmly clinging onto old coins??? This 5c debate has a while to go yet...
      Also the only place I usually use cash is at the pub; the bartender was geting shirty when I used my card every 10mins...

        Open a tab, settle at the end of the night. Means you don't have to handle money at all while you're drinking, your bartender will love you and no need for cash.

    Wont somebody think of the Echidna !?! Where will the little monotreme go then ? We could always bump the Queen from the other side and have Echidna's on every coin !!!!

    I think its time to bring back 1 and 2 dollar notes! With our currency being so strong, it could replace the US dollar as a second currency is some parts of Asia...who knows the world might even start trading oil in Aussie dollars!

      Hells yeah! I've been saying that for years. One and two dollars are still useful currency amounts, yet lugging them round is cumbersome and annoying. Paper money stacks and folds easily, and has no issues being put in a wallet in bulk. Try and use that argument for coins.

      By all means, retain one and two dollar coins, but add the denomination in note form as a companion currency.

    I'll support the redundancy of small currency as soon as there are federal law's imposed to prohibit the charging of goods or services in anything smaller than the current lowest dominator (i.e. everything should be charged in a multiple of 5 cents under the current currency).

    Rounding is retarded, and creates an annoying headache for financial analysis. You wouldn't see a supermarket charge you fractions of a cent, so why are they still charging odd amounts like "97 cents"?

    why not just get rid of cash entirely and go all electronic? I mean, OzLog knows what you've been looking at on the net so why doesn't the govt want to know what we've been spending our money on? /sarcasm

    Actually you can't force a shop to accept $5 in coin. Your own previous article even says that.

    "It is the Reserve Bank of Australia’s understanding that, although Australian currency has legal tender status, it does not necessarily have to be used in transactions and that refusal to accept payment in legal tender banknotes and coins is not unlawful."

      True, but if they take coins at all, those are the rules.

        I was under the understanding that legal tender in Australia only applied to the payment of a debt. That is, a shop can refuse all cash and only accept payment in the form of credit card if they like (as online stores do) or they can only accept certain denominations of coins and notes (as vending machines do).

        However if you owe someone $5, and you hand them 100 5c coins, they can't refuse to accept it.

        http://en.wikipedia.org/wiki/Legal_tender#Australia

    I would miss 5c coins for non currency reasons. There are many electronic items that I get to the battery compartment with a 5c coin.

    I also recently modded a Nerf Maverick with 5 5c coins to give the spring extra umphh.

    Maybe should ask what are everyone's favourite lifehacker mods with a 5c coin?

    I agree that they need to make the $0.50 smaller and get some $1 bills. As an american I hate having to cary a bunch of chance if I want to have just a few dollars on me to buy a drink or something. That said, I also hate having to buy $7+/gallon of gas instead of less than half that in the US :)

      Whereas I suspect most Australians hate the fact that US dollar notes are hard to distinguish from higher denominations, look and often smell filthy and have to be constantly handed out as tips.

        you can be grumpy sometimes, Angus, but this time I cheered inside. :) (plus: I know that in AUS blind people can sort their bills and work out what they've got because they are different sizes: how does this work in the US?)

        Haha so good. It's interesting actually, I've found that Americans have a weird sense of nationalism with their banknotes. I remember reading a discussion on an online forum (populated mostly by liberal types, so not really the rah-rah America! type) but when someone broached the topic of new banknotes for the USA in different sizes (if not colours), there was an uproar. The thought of making things easier for those with impaired sight, or even regular people (we've all groped for notes in our wallets looking for the right one) was completely beyond their comprehension. It was all about not changing their 'iconic' banknote.

      $1 and $2 notes where replaced with coins many years ago.

    Have a read of this article from snopes about the US penny (in particular the last paragraph): http://www.snopes.com/business/money/pennycost.asp

    It's not really about the cost of the coin vs its face value, its about the multiple times the coin is used within the monetary system. Unless, of course, people start melting them down.

    Why dont we just abolish the entire financial system altogether...

    It's actually a big deal. Supermarkets set prices at .98 and .99 - and anyone who's paying cash pays more. Count up every cent that's been rounded, every day, by every person, and you've got yourself a whole lot of money. Probably millions of dollars over a short amount of time.

    Make it so rounding is to 10 cents not 5 and you effectively reduce the value of cash. Buy something gor $9.96, you'll end up paying $10, do that a thousand times and you've lost yourself $50. Do it ten thousand times (which you will over the course of a few years) you've lost $500. Surely that's kind of a big deal do a lot of people?

      But when I go shopping I don't buy individual items. I buy items in groups, and those groups often round to .97 or .96 or .94 or .92 or whatever.

    Why not get rid of all coins. Gosh they just take up space in my wallet. When will this madness end?

    The manufacturing value of a 5c coin is not equivalent to the actual worth of the coin. Over its lifetime, a 5c coin would have performed more than one transaction, so its value to the economy would be significantly more than 5c. I don't think this is a good enough reason to stop minting 5c coins.

    However, I do think they should be discontinued - because of the rise of electronic transactions and it's such an useless denomination.

    I would like to see prices listed to 1 decimal place, except for items where the nature of the good forbids that (e.g. the cost per unit of sale is tiny).

    This removes the rounding issue, the 5c issue and the psychological issue of "$9.98" =/= $10 (to some extent anyway, $9.9 would still arise).

    This simplification is the main reason I would like to abandon the 5c coin. There is also the fact they are the hardest coin to get rid of in my experience. I don't like carrying copious shrapnel.

    I wouldn't however take into account the coins cost of manufacture and the value of printing higher denominations. While some schools of economics permit the printing of money, most mainstream schools hold that printing money is a bad bad thing.

    As for unifying the AUS and NZ currency, this would seriously hurt NZ - Aus is having a mining boom and non-mining industries are doing it hard with the high $A this has caused.

Join the discussion!