It has been 1 month since the penny’s production and distribution has come to a halt, and as I am sure you have all experienced or at least heard, retailers will now decide how to adjust the final cash amount of purchases. Leaving the decision up to retailers means that we might end up paying a few extra cents on each transaction, but not if you’re smart about how you pay. The following article will explain why the change took place, what the government has suggested to retailers, and how to avoid paying extra.
In the Economic Action Plan for 2012, the Government announced it would phase out the penny from Canada’s coinage system. The decision to phase out the penny was due to its excessive and rising cost of production relative to face value, the increased accumulation of pennies by Canadians in their households, environmental considerations, and the significant handling costs the penny imposes on retailers, financial institutions and the economy in general.
The main reason for the phase out was that it cost about 1.6 cents to make a single penny, and by saying goodbye to the penny the Canadian government will save taxpayers an estimated 11 million dollars a year.
Starting on February 4th 2013 the government of Canada stopped distributing pennies. However, the use of pennies is still accepted, and it is at the retailers’ discretion on how to round cash payments.
The Government of Canada suggested that retailers round to the nearest 5 cents. This means down from $1.01 and $1.02 to $1.00, and up from $1.03 and $1.04 to $1.05 for example. I for one doubt retailers will be rounding down very often though.
So, to avoid paying extra at the till, pay via credit or debit because electronic transactions will not be impacted.
For more information you can visit actionplan.gc.ca/penny or call 1 – 800 – O – Canada.
Tyler Brown – Financial Security Advisor
WP: (519) 648-9580
CP: (519) 212-9859
FX: (519) 489-2740
244 Woolwich St. South, Unit #1 ~ P.O. Box 261 Breslau, ON ~ N0B 1M0