Banks are begging for spare change: How long coin shortage could last
Banks are begging you to break open your piggy bank, dig through your seat cushions and unload those coffee cans full of change sitting in the closet.
The COVID-19 change shortage has bankers across the country asking customers to bring in rolled coins as a way to pump more pennies, nickels, dimes and quarters into circulation.
“If you have spare change, we encourage Michiganders to contact their local bank and make an appointment to exchange rolled coins," said T. Rann Paynter, president and CEO of the Michigan Bankers Association, in a statement.
A Wisconsin bank this summer went so far as to offer an extra $5 for every $100 in coins that are brought in.
The deal turned out to be incredibly popular and lasted but seven days.
"People brought stuff in cans, bags and jars," said Greg Wall, chief innovation officer for Community State Bank, which has $460 million in assets and seven branches in southeastern Wisconsin.
"People have been sitting on this stuff for a long time and they finally had an opportunity to do something."
One person brought in $4,000 in coins – netting a $200 bonus.
"At this point, we're going to pause the program," Wall said, noting that the goal of building up coin inventory for local businesses was met and then some.
Its worst performance ever:U.S. economy contracted record 32.9% in Q2 amid state shutdowns
It's quite a switch from a time when many banks didn't want your spare change.
In the past few years, many big banks phased out services that would count your coins. Some, like Community State Bank, charge a 10% fee to count change for non-customers. Other banks charge both customers and non-customers.
Banks want you to roll coins in paper wrappers yourself. Some banks may limit the dollar value of coins they're willing to take.
But a lot has changed during the pandemic.
Quite simply, we're not throwing around our money like we used to. Since mid-March, huge chunks of the U.S. economy have shut down in an effort to reduce the spread of the coronavirus.
Laundromats, coffee shops, bank branches and other spots where coins regularly changed hands have either closed their doors or significantly trimmed operations.
At the same time, the "U.S. Mint’s production of coin also decreased due to measures put in place to protect its employees," according to the Federal Reserve. Production has been ramped up.
Recirculated coins represent more than 80% of the supply; the rest involves new coins produced by the mint.
Even as the economy reopens, change isn't rattling around the car like it did last summer.
The Ohio Turnpike continues flashing electronic signs that suggest drivers use E-ZPass or a credit card, not cash, to pay their toll.
"We will continue to discourage cash during the pandemic because handling it is riskier than our other methods of payment," said Brian Newbacher, public information officer for the Ohio Turnpike and Infrastructure Commission.
Right now, he said, the turnpike is able to recycle the coins it receives to other customers who are using cash. But cash usage is down.
Drivers are responding to those electronic signs. In June, Newbacher said, cash transactions at toll booths were down 44% compared with June of last year. Credit transactions were up 32%.
"If customers are going to use cash, we ask that they do their best to provide us exact change, if possible," he said.
"That way, we can also do our part to not only keep everyone safe, but avoid adding to the coin shortage as well."
Cash isn't always king
Some retailers are encouraging the use of plastic, not paper currency, due to fears that currency could spread disease. So theoretically, the pandemic could help boost cashless, digital transactions.
Even so, some small businesses still prefer cash, and may be hurt by the coin shortage because they want to avoid the extra fees charged to merchants when customers pay with a card.
And every shortage comes with its own conspiracy theory. Some say the coin shortage is a grand plan to put a stop to the private nature of cash transactions.
One Facebook post stated: "Start saving coins, they will soon be worth more as a keepsake or remembrance of 'the old world.' The national coin shortage will be just like the great toilet paper shortage – the only difference is, once the coins are gone, they will not be coming back."
But Patricia Herndon, executive vice president for government relations for the Michigan Bankers Association, said the lack of coins simply reflects spending patterns.
"People are just not really using coins and cash right now," Herndon said. "This is truly an issue of money flow."
Some are worried about transmitting germs by using cash. But Herndon said people just need to take precautions, such as washing their hands or using hand sanitizer after exchanging money.
"You're not the first person to touch it; you're not the last person to touch it," she said.
Demand for change picks up
The Fed began rationing coins this summer to deal with the shortage since demand is expected to pick up as businesses reopen.
The Federal Reserve is projecting that we'll experience a gap between supply and demand that ranges from 2.3 billion to 3.5 billion coins each month through the end of 2020.
Nationwide, more than 4 billion coins were deposited – or recirculated – each month during the first three months of 2020, according to the Michigan Bankers Association.
The numbers plummeted by more than half, to essentially less than 2 billion, beginning in April.
The Federal Reserve has formed the U.S. Coin Task Force to "identify, implement, and promote actions to address disruptions to coin circulation."
During the pandemic even when many do go out, they tend to use debit or credit cards.
The change that we would have received – and later spent elsewhere – is no longer a steady part of our daily spending diet.
Retailers craft their own strategies
We're seeing all sorts of signs at the cash register, as retailers take creative approaches to dealing with the shortage.
Some Dollar Trees have posted signs at the door saying: "Dollar Tree will purchase any rolled coins you want to exchange for cash."
A few customers have walked in the door with coins wrapped in rolls to exchange for paper currency.
"We're getting some, not many," said Daisy Myers, assistant manager at the Dollar Tree in Hazel Park, Michigan.
The Dollar Tree, which also owns Family Dollar stores, asks customers to pay by debit or credit card or to use exact change to cover a purchase when possible.
Kroger says it can now load change onto a customer's loyalty card so the shopper can use that extra change on the card during their next trip for groceries.
Kroger has also asked customers whether they want to round up a purchase to an even number to avoid a need for change, and to donate the difference to The Kroger Co. Zero Hunger Zero Waste Foundation, a public charity.
"Like many retailers and businesses, we are adjusting to the temporary shortage in several ways," said Rachel Hurst, corporate affairs manager for the Kroger Co. of Michigan.
Kroger is still providing coin change at lanes in the store that have coins available, Hurst said.
Self-checkout registers at many retailers may now allow purchases only with cards.
Spare change can supplement any budget during uncertain economic times, too. Yet some traffic was down at coin-counting machines, too.
During the pandemic, Coinstar kiosks remained available, but foot traffic at supermarkets and other locations has been down, so fewer people are exchanging coins, according to a statement from Jim Gaherity, the CEO of Coinstar.
"As lockdowns end, coin transactions and volumes through Coinstar
kiosks are growing and, accordingly, we've been making more frequent coin
pick-ups to help get coins back in circulation," Gaherity said.
If your hours are cut at work, it may be a good time to reconsider letting unused coins just sit there. But if possible, it's best to avoid the fees charged by many coin-counting machines.
Coinstar kiosks offer eGift Cards in exchange for coins, for no extra fee. Otherwise, you could face an 11.9% service fee to convert your coins to paper currency. Fees may vary by location.
Check Coinstar.com/giftcards to understand the rules. Some gift cards require a minimum amount of change, such as $5 for an Amazon gift card or $10 for an Outback Steakhouse eGift card.
Again, you may need to count that change first to save the most money.