Dollar Coins- Saving The Government Money?
If you ask the average American, they have probably only used a dollar coin a couple times in their life. To most of us, the dollar we are used to is a paper bill. In fact, if you are like me, you probably don't even carry change most of the time. When I use cash, I typically keep the change, then drop it in a glass when I get home, after filling the glass I roll the coins.
The dollar has been manufactured in coin form since currency was standardized in the U.S. For some reason, the coin form has never really caught on in the U.S. Over the years the U.S. Government has made efforts to increase the popularity of the dollar coin. It's a little known fact that the dollar coin is actually more cost effective than the paper dollar bill. Let's take a look at what the coin has to offer.
Throwing Away Paper
The dollar bill is convenient to most of us, it fits in a wallet along with the other bills. If you are carrying around larger bills, it makes sense to carry the $1 along with your $5 and $10 bills. Also, the average cash register is set up to hold a set number of bills and coins, when you try to add an additional coin size, you might confuse your cashier.
The biggest downfall of the dollar bill is its lifespan. The dollar bill has an average lifespan of 18-22 months. Some will last longer, but that means that every two years or so the U.S. Mint has to make a new supply of dollar bills. A dollar bill only costs 6 or 7 cents to make, but because it has to be replaced so frequently, it ultimately costs the government more money to use it over time.
Because of the short lifespan of the paper dollar bill, that means that there are hundreds of thousands of bills that are returned to the mint and shredded each year. In tough economic times it is hard to imagine that the government has to shred money before they can make additional money. The Department of the Treasury controls the total amount of money in circulation, so before making new money, they must destroy the old money.
Switching To Coins
The dollar coin on the other hand, costs around 30 cents to make. This is obviously quite a bit more expensive, especially considering the volumes that the U.S. Mint manufactures every year. However, it is estimated that the dollar coin lasts anywhere between 15 to 25 times as long as the average paper dollar bill. As you can imagine, that short term cost is more than made up for in the long term.
With those numbers, it is easy to see that there would be savings using coins in the long run. Those coins don't wear out nearly as fast as the bills do. That means that even with hard use and constant changing of hands, the coins will still remain in circulation long after a paper dollar bill would have crumbled into pieces.
The U.S. Mint estimated in September of 2002, that if it ceased production of the paper dollar bill and only manufactured dollar coins, it could save over 500 million dollars in the long term. That is a huge savings and relief for the average American taxpayer. Would that solve the U.S.'s budget issues? No, but think of what else 500 million dollars could go to if it wasn't spent on making money.
Putting The Dollar Coin In Circulation
The U.S. Government has been attempting to get the $1 coin into circulation. These efforts include using the coin at government facilities, such as the US Post Office. Whenever I use cash at the Post Office, I get dollar coins back as change, rather than dollar bills. This encourages the average person to spend the coins at the next opportunity.
Another option is your local bank. Most banks have $1 coins, they just may not give them out unless you ask for them. My local banks carries $25 rolls of coins, so yes, that's 25 coins. They don't like to break up the rolls, so if you want them, you have to take the whole roll. This can be great when you are cashing checks and know you are going to be spending the money soon. I will sometimes get a roll when I am cashing a larger check. Then you can keep some coins in your pocket, or purse for the ladies. Instead of using dollar bills for something that costs a couple dollars, use coins. Or after you pay your dinner bill, use the coins for the tip.
One other option for getting dollar coins is to buy them straight from the US Mint. In order to get the coins out on to the market, the Mint has a special offer, where if you buy $250 worth of dollar coins, they will ship them to you for no additional cost. They are hoping that you spend the coins, not hoard them or go straight to your bank to deposit them.
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Dollar Coin Update- 01/13/2012
Recently I learned that the US Mint will cease production of the Presidential Dollar coins for general circulation. Although there are many positive reasons to use the dollar coins, it seems that the coins are not seeing regular circulation and there is a large supply sitting idly at the various federal reserve branches.
The Mint will continue to manufacture limited amount of the new presidential coins, which will be marketed directly to collectors. While I would guess that there will still be coins in circulation for some time, thanks to the reserves, it does make me wonder how this will affect the usage of dollar coins in the long run.
Let me know what you think of this in the comment section below. I know I will probably still request dollar coins for change when I am at stores, but it seems that more often that not, they don't have any in their registers.