Why Does Everybody Hate Dollar Coins?
According to a recent report from NPR, the Federal Reserve has $1B worth of dollar coins just sitting around. The production of these coins stems from a 2005 Congressional mandate to produce a new series of coins honoring past Presidents. Unfortunately, the general public doesn’t seem to like them and very few people are using them.
The argument in favor of these coins is that they’re more cost-effective than paper bills. These coins have an estimated life in circulation of 30 years vs. 4 years for a paper bill. Moreover, according to the General Accountability Office, the net benefit of switching from paper to coins would be on the order of $5.5B over 30 years – not too shabby, huh?
While this sounds like a significant savings, it could more properly be described as a “profit.” The reason for this is that it only costs $0.30 to make a coin that has a $1.00 face value. To be fair, it costs even less to produce a dollar bill, but still… If you factor out this profit, which is essentially an invisible tax, the paper-to-coin transition is expected to end up costing taxpayers money.
As an interesting sidebar, the Fed has estimated that they will need to issue 1.5 dollar coins for every dollar bill they are meant to replace. This is due to differences in how people handle coins vs. bills. In other words, there’s a tendency for people to allow coins to pile up in change jars, cup holders, etc. such that they circulate more slowly than bills.
With that as a backdrop, here are some stats:
- To date, 2.4B Presidential dollar coins have been minted
- The total cost to mint these coins was $720M
- Just 1.4B of them have made into circulation
- 1B of these coins are sitting unused in Fed vaults
The big problem here appears to be that people just don’t like dollar coins. Thus, unless dollar bills are withdrawn from the market, it seems unlikely that we’ll see widespread adoption of dollar coins. In fact, according to the Fed:
“We have no reason to expect demand to improve. We also note that a 2008 Harris poll found that more than three fourths of people questioned continue to prefer the $1 note.”
What do you think? Do you like dollar coins? Why or why not?
As for me, I kind of like them though, to be honest, the only reason I have them is because I bought a bunch from the US Mint to break through a credit card reward tier last year. While I’ve spent quite a few of them, I’ve never actually received one in a transaction of any sort.
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Modified on July 5th, 2011 - 42 Comments
Filed under: Economy
About the author: Nickel is the founder and editor-in-chief of this site. He's a thirty-something family man who has been writing about personal finance since 2005, and guess what? He's on Twitter!
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42 Responses to “Why Does Everybody Hate Dollar Coins?”
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July 1st, 2011 at 2:02 pm
I love dollar coins. Great for arbitrage.
July 1st, 2011 at 2:04 pm
What an apt post written by someone who identifies himself as “Nickel” — yet another (more-loved) coin.
Simply stated, coins are easier to lose than bills. I lived in Australia for a year, where the only $1 and $2 in circulation come in coin form. I’d often stick five $2 coins in my pocket, only to discover that they’d fallen out … thus losing $10. This is why I dislike coins.
As a side note, when I was in high school I worked at an amusement park that made it a policy to hand out dollar coins as change as much as possible, on the theory that people are more likely to spend coins than bills.
July 1st, 2011 at 2:14 pm
Dollar coins are just too bulky and heavy.
On a lighter note, it’s more painful to the girl on stage when you make it rain with coins.
July 1st, 2011 at 2:25 pm
I’m not a fan. They weigh more than bills and don’t fit in my wallet. Also, I have yet to see a machine (e.g., vending machines, car wash, parking meter) that accepts them.
I’m not exactly a fan of paper money either. I use plastic for 99% of my purchases.
July 1st, 2011 at 2:32 pm
Same as everyone; they weigh too much. I do the whole Mint cycle like many of us but out of $1000 worth of coins, I’ll only use $50-100.
Now if they made a $2 coin… maybe
July 1st, 2011 at 2:40 pm
I had ceased to participate in the Direct Ship Hustle for Rewards due to the ethical ambiguity of violating the terms of service. Now, I see that the few rolls I circulated were making far more of a difference than I previously believed. Thus, I’m back in the game.
July 1st, 2011 at 3:05 pm
I’ll pass. The few times I have used them (just to get rid of them) have been a pain. When I hand them out, I always feel the need to say “This is a $1 coin” b/c I’m afraid it will be mistaken for a quarter or something. Then there is that uncomfortable period of confusion… The transaction pause that happens as the clerk looks at you – then looks back at the coin – then looks back at you while they try to figure out what it is you just handed them. Ultimately the issue is that they are bulky and inconvenient.
July 1st, 2011 at 3:12 pm
If I were running the Treasury Dept, I’d eliminate the penny ASAP. It may cost 30c to make a $1 coin, but it costs almost 2c to make a 1c penny…
July 1st, 2011 at 3:18 pm
I like the dollar coins, but I haven’t had the opportunity to use them very often. I don’t mind the weight (I carry a purse, so they’re just one more thing).
I do think it’s sad that the infrastructure (as mentioned: vending machines, parking meters, car washes, etc.) for them doesn’t yet exist. Most cash drawers don’t have a spot for them, either.
Hopefully the gov’t will make some adjustments and people will start to appreciate the coins more. They are so much more cost effective than dollar bills (coins last longer).
July 1st, 2011 at 3:24 pm
Speaking as someone who worked as a cashier in the past. They don’t fit in the equation nicely when we think of money. Any change a dollar and higher is given back in, well, dollars and anything less than a dollar is given in cents. Plus, cash drawers are not usually laid out for dollar coins. Whenever someone paid with one I would just throw it in the space with the extra rolled coins that were in the drawer.
July 1st, 2011 at 4:56 pm
Isn’t this part of the overall strategy of the Fed/Treasury? By printing “collector” coins and other coins that will ultimately stay out of circulation they are issuing curency that they never need to stand behind, thereby increasing liquidity without effecting the valuation of the currency.
July 1st, 2011 at 6:19 pm
Have you ever bought something with a $20 bill from a machine that gives change in $1 coins? Imagine putting in a single bill and getting back 19 big heavy coins. It’s ridiculous.
July 1st, 2011 at 6:50 pm
Why is the Canucks have loonies and tunnies, one and two dollar coins and no one seems to have an issue with them? They replaced the one and two dollar bills years ago.
July 1st, 2011 at 8:30 pm
Duh. Nudge people into using them. Phase out the penny, phase out the dollar bill. People are adverse to change. Phase out their choice and they’ll barely notice.
July 1st, 2011 at 8:34 pm
MITBeta: Agreed. In other countries where the paper-to-coin transition has been made for lower denominations, people didn’t like the idea, but the paper was taken out of circulation and resistance quickly faded. I suspect the biggest limitation is that people don’t like change (pun only sorta intended).
July 1st, 2011 at 8:41 pm
I would love them. While I don’t carry a lot of cash with me, we did when we went to Canada for a couple weeks’ vacation time. I loved the loonies and toonies, as they were much easier to handle and figure out quickly than all the paper cash (and eliminated confusion due to not having as many paper denominations). I kept thinking how much easier it would be to have one- and two-dollar coins than paper in the US, especially for parking spaces that cost a dollar an hour or more. I’ve also worked with people who have vision impairments or blindness, and I think this would also help eliminate some of the confusion with US money for them as well.
July 1st, 2011 at 10:43 pm
I hate dollar coins for the same reason I hate ALL coins…they’re bulky, awkward, slow, and it’s hugely annoying when someone in front of you uses them to pay with. I would much prefer to go credit/debit only.
July 2nd, 2011 at 12:10 am
I use them all the time. Slowly, DC meters are beginning to accept them (2 one-dollar coins weigh the same or less than 8 quarters), pay-and-go parking garage stations process them faster than credit cards or paper notes, and the vending machine on my floor at work now takes them.
Recently, though, the bank I’ve been buying them from hasn’t been keeping rolls on hand. That part is a bit annoying.
All-in-all, I love the dollar coin and I wish more people would show it some love.
July 2nd, 2011 at 12:20 am
As a point of fact, most vending machines have been accepting dollar coins for years, since the Susan B. decades ago…we just don\\\’t try it! I\\\’m sure there are a lot of ancient parking meters still in use, moreso than old vending machines, but newer meters take dollar coins, too.
July 2nd, 2011 at 4:08 am
I like the novelty. But the first time I tried to pay cash at a gas station, the clerk behind the bullet proof window refused to accept the coins. Said they were not American coinage! So I now buy them to give to friends that are traveling overseas to give away as souvenirs. Only problem now is when I ask for them at a bank, either they do not have them, or they are oxidized coins. I don’t know why they cannot come up with a coin that doesn’t turn dark. My limited solution is to break out a tooth brush and paste and polish them up. I know that it is a bad idea re a coin you want to collect, but there are billions of these and they will never be collector items. They are also fun to give to kids. Adults will give you the evil eye. Or worse roll their eyes until one of them falls out.
July 2nd, 2011 at 7:34 am
It’s the weight and bulk issue for me too. My pocketbook already weighs a ton! I think that if the US people want their dollars in paper form, that we should be allowed to have that. It’s not too much to ask.
July 2nd, 2011 at 3:02 pm
The vending machines where I work accept them and the change machine dispenses them rather than quarters. It’s sort of annoying when I only have a $20 and I get 20 heavy coins, but not bad. I would support the transition to dollar coins and the phase-out of dollar bills.
July 2nd, 2011 at 4:21 pm
As an Australia who has traveled in New Zealand, the USA, UK and other parts of Europe, I whole heartedly support the $1 coin. Paper money tears much too easily. And it much easier to reach into one’s pocket for a handful of coins and sort those, than to always be checking the loose notes you have ready for the bus are still there. With all of your notes looking identical, it’s more work to approximate how much money I have. Sometimes I pay for something with one note and get a wad of folded, dirty notes back.
I do understand that people feel that tipping with coins is being cheap. You leave a $1 note for your drink at the bar, and $1 note for room service, but would feel weird about leaving a coin instead. I don’t know how you fix this.
July 2nd, 2011 at 10:32 pm
Giving dollar coins and half dollars for tips is fun. Something a little different.
July 3rd, 2011 at 12:03 am
I am all in favor of getting rid of $1 paper bills. I spent three years in Japan and I loved their currency and had no issues with the smallest paper bill being worth $10 USD.
I believe if the Government stopped producing paper bills people would use the coins essentially through force. I also believe that people do spend coins different than bills. There is some research and infrastructure upgrades needed but I would support the transition.
July 3rd, 2011 at 12:53 am
I couldn´t imagine using bills with such a low denomination. The lowest paper bills in Europe are 5 Euro, which is about 7 $. Even those are not used widely. The coins go up to 2 Euro, and the paper bills to 500 Euro, but mostly you use 20 or 50 Euro bills. I paid my car in cash, though, and used 500 Euro bills for the firts time.
July 3rd, 2011 at 7:33 am
The tooth fairy gives dollar coins at our house….the weight doesn’t seem to affect her flying ability!
July 5th, 2011 at 4:07 pm
I love gold dollars! I save them though and call them “Pirate’s Gold”; I even wrote a post about them.
I don’t currently use them (gold dollars) to pay for things, but do get excited when I get them back as change. Also, I save all my $1 paper bills (and change) as well, so maybe I’m just into saving small denominations of money. Still, I can understand both sides of keeping paper bills and ditching paper bills. Personally, I think that decision will be made no matter what any of us (the little people) want or say about it. If it saves/makes the government money, then they’ll most likely do it.
July 5th, 2011 at 10:48 pm
I have been attempting to use the Treasury’s “Direct Ship” program for its intended purpose for years. I have had many instances of the person behind me in line buying the coin for their children’s piggy banks. I have received disgusted looks and comments from merchants who get umpteen coins for a transaction under $20. I have had friends request that I replace the coins I gave them with nice, lightweight paper money. None of my efforts seem to have put coins “in circulation.” As long as the government and/or treasury are not fully behind the coins, no amount of yahoos with rewards credit cards will do the job. And by support I mean nothing less than: remove dollar bills from circulation.
July 8th, 2011 at 10:37 am
Like some earlier commenters, I don’t like coins of any denomination. I carry some cash, but I mostly use credit cards for purchases. Whenever I have coins, I either drop them in the tip jar or put them in the center console in the car to use for occasional tolls or small drive-thru purchases.
I never carry coins in my pocket if I can help it.
July 9th, 2011 at 8:41 am
Round off all retail prices to the nearest nickel and retire the penny, and voila, there’s room in the cash drawer for dollar coins!
July 11th, 2011 at 12:07 am
It doesn’t add up to that much more weight. How many one dollar bills do you really carry?
Being Canadian, we’ve had the dollar coin for ages.
July 11th, 2011 at 6:27 pm
I don’t like the rattle of coins in my pocket when I get $1 coin change from the train ticket machine, but I like the idea in principle. A $5.5 billion savings is a “no duh” decision for the country.
And, as a coin collector, I have always enjoyed coins for their intrinsic ability to make me happy.
July 16th, 2011 at 1:14 am
I love dollar coins!. We use them when we run a convention booth, and our customers love receiving them. The inconvenience that I have is getting them in the first place.
As for weight, I just regularly empty out my change into a coin box at home. So carrying a few dollar coins is no problem for my wallet.
August 26th, 2011 at 4:38 pm
I’m not with the Dollar Coin Alliance but wanted to link to them to spread the education they provide.
I use dollar coins everyday. It was easier to get them through Direct Ship and I am disappointed that this option is gone. Rather then limiting a good program, the Credit Card companies could have not provided the points for the transactions. That would have been better.
I now must rely on my bank which only one tell seems to ever take the coins out of the volt to have available upon request.
Dollar bills need to stop being printed and taken out of circulation as they wear out.
August 29th, 2011 at 2:54 pm
I love dollar coins, I use them all the time. I’ve never used the Mint’s Direct Ship program, I always just go to my bank and buy some rolls while I’m taking out money. Between dollar coins and $2 bills I never have to take a dollar bill as change, but if I do I just tuck it away and bring it to the bank for more coins and $2 bills.
I also fully support using them to cut a couple hundred million dollars out of the federal budget too.
November 17th, 2011 at 4:09 pm
Others have mentioned how other countries use coins for amounts equivalent to $1–and more. In fact, the U.S. seems to be the only developed economy that still uses bills for such small amounts. Euros and Canadian dollars have coins equalling $2 or more, and the British converted to pound coins decades ago. Other EU countries outside the Euro have done the same.
Equally odd is the U.S. aversion to large bills. Hand them a $50 bill at my local grocery store and you get treated as some sort of felon.
December 14th, 2011 at 1:47 pm
It is hilarious to me to see people write on here things like. Coins are bulky and slow.
America, do you like to waste money? You have all those coins in storage, its time to take your dollar bills out of circulation and put them to use, not to mention that you have to print bills way more often, just another waste of money.
December 16th, 2011 at 1:48 pm
I realize that I am older than dirt, but as a child we had real silver dollars (Morgans and Peace) that are collected today. Issued between about 1879 to 1921. Many of them can be fould today in coin shops as they were so unpopular that many were kept in bank valts until the 1960s. Nevada loved then, they fit in the slot machines, but most Americans just never liked them. It is not a new problem.
December 23rd, 2011 at 2:04 pm
I’m British. I love visiting the USA- but I find your money really fiddly. Why do you have such a worthless note that costs you lots of money to produce, becomes dirty and torn quickly, and is environmentally damaging to produce?! When pound coins were introduced here, they were a bit unpopular at first, but as pound notes were no longer produced, people got used to it. End of story. Pound coins don’t weigh that much, aren’t easy to lose etc etc
September 3rd, 2012 at 1:02 pm
Phase out the dollar bill. Phase in a two dollar coin. Voila.
October 23rd, 2012 at 5:44 pm
I like the coins but the problem is that merchants don’t.
I don’t know how many times I’ve used a dollar coin, only for the cashier to lift up the cash drawer and pop it into a compartment below. There it sits hidden away until the end of the day when it’s put into the deposit pouch for the bank, and back out of circulation it goes.
If merchants would only give them out in change, they would gradually gain acceptance. But most refuse to do this.