WASHINGTON–With Treasury announcing it is phasing out the penny, CFOs who were asked by the CU Daily for their two cents worth on what the move might mean said credit unions are going to need to develop rounding policies, create a new general ledger entry, will likely see new costs and savings, and more. And U.S. CUs might also want to look to Canada for some advice.

As the CU Daily reported earlier, the Treasury Department has placed its last order for blank pennies and plans to stop minting the one-cent coins as soon as that supply is exhausted. 

According to the government, the penny costs nearly four cents to produce. Stopping production of the penny will save the government $56 million a year. 

Pennies will remain legal tender, which is fortunate since more than a billion dollar’s worth are in circulation.

More Than 230 Years Old

The U.S. began minting pennies in 1793, the year after Congress authorized the Mint. President Abraham Lincoln was the first president to be featured on a coin, starting in 1909, the centennial of his birth. 

But Abe’s copper face will slowly be fading (he remains on the $5 bill), and credit unions will have to make some adjustments.

To explore what some of those adjustments might be—and with the proviso that at this point it’s early so forecasts may vary—two CFOs, speaking on behalf of America’s Credit Unions’ CFO Council, shared their predictions with The CU Daily, one of whom asked AI for some assistance.

Already Discussing Issue

While the Treasury announcement is recent, David D’Annunzio, CFO with Civic FCU and Local Government FCU in North Carolina (which are merging), which share administrative functions, said that while the credit union(s) have not yet determined how elimination of the penny would affect its branch operations, it is an issue it has already discussed “informally.”

“On deposits, we would not expect to see much of an impact for the foreseeable future,” D’Annunzio said. “Coin-counting machines will still process pennies, and we can collect them, recycle or send back to the Fed as we would normally do.  We would deposit the balance to the member account to include the pennies as the technology currently permits.”

When it comes to cashing out a withdrawal from an account, D’Annunzio said at this point he believes the credit unions would only permit amounts supported with nickels and there shouldn’t be much of an issue with a typical currency withdrawal from existing balances/active accounts.  

Core-Based Tracking

“For limited circumstances when a member (or nonmember) is cashing a check that includes pennies, I would expect we would likely round up to the nearest five and create a core-based tracking of the difference so the over/under for the cash drawer would remain auditable / trackable,” D’Annunzio explained in a statement to the CU Daily. “I would expect the core systems will change to accommodate this need and eliminate balancing issues and create an expense for the difference.  I would see the same approach for cases when a member fully closes an account requiring a ‘final’ withdrawal that may include pennies.”

Potential Cost Savings

At this point, D’Annunzio said he’s not sure he can really forecast any measurable cost savings, but added, “In theory, the need to keep an inventory of pennies and the related tracking and audits would require slightly less time.”

After observing that the “nickel has become the new penny,” D’Annunzio joked that perhaps armored carriers will pass on the savings from not having to transport as much coin, but it turns out AI believes that’s a possibility, as reported below.

What ChatGPT Forecasts

For some insights and predictions on what the end of the penny might mean for credit union operation, Ed Lis, CFO with First Choice Financial FCU in Gloversville, N.Y., turned to ChatGPT for its “thoughts” on the issue. 

According to Lis, ChatGPT said the questions to be considered include:

Transaction Rounding: Operational Considerations
If the penny fades from circulation, ChatGPT forecast:

• Cash transactions would be rounded to the nearest $0.05, as has been the case in Canada since 2013.
• Electronic transactions (cards, ACH, mobile) would still process at exact value, with no rounding needed.
• Branch cash balancing processes would likely include a “rounding adjustment” line item, possibly shown in end-of-day balancing reports and daily GL entries under a “Rounding Gains/Losses” account
• Credit unions should develop and define “rounding policies e.g. $0.01-$0.02 rounds down, $0.03-$0.04 rounds up) and train tellers accordingly.

Accounting & Reporting Adjustments
Expect a “minor GL account” to be created to track daily or monthly rounding discrepancies, ChatGPT suggested, likely under “miscellaneous income/expense.”
For larger institutions, ChatGPT said tracking the net impact of rounding (especially for high-volume, low-dollar cash branches) could inform operational audits or fee strategy updates.

No change is likely needed for electronic accounting systems, unless the CU offers penny-denominated investment products or pricing, ChatGPT surmised.
Cost Implications & Savings
When it comes to costs, ChatGPT said it sees potential savings in:

• Reduced armored car frequency due to lower coin volume
• Elimination of penny rolls, saving labor time and reducing vault and teller coin float complexity
• Less coin-counting machine maintenance and downtime. However, savings will likely be “marginal,” unless a credit union has high coin circulation(e.g., coin-heavy member base, coin machines, or cash-intensive branches), or the credit union incurs third-party charges (e.g., Fed coin orders, armored coin delivery).

Policy, Compliance & Member Communication
ChatGPT said that when it comes to policy, compliance and communication issues, credit unions will need a formal rounding policy may be required for audits, clearly defining:

• When rounding occurs (cash only)
• Rounding thresholds as outlined above
• Clear disclosures at teller lines or on receipts
• Staff training on how to explain rounding to members, especially in low-trust or high-complaint scenarios

Blind Spots or Overlooked Issues
The blind spots ChatGPT said credit unions will need to prepare for, include:

• Coin machine service contracts that might need to be renegotiated. “If the CU charges members to use these, rounding may affect revenue slightly,” ChatGPT suggested.
• Member perception: Some members may object to rounding if not transparently communicated.
• Low-income or elderly members relying more on cash may be affected disproportionately by round-up bias.
• If the credit union operates in areas where state sales tax is calculated post-subtotal, it may require policy alignment with local authorities.

Strategic Outlook
Finally, according to ChatGPT’s forecast, while a penny phase-out won’t materially affect most CUs’ financials, it could prompt broader digitization.

As such, the AI recommends credit unions:

• Promote card-based or mobile transactions to avoid rounding concerns.
• Position the CU as tech-forward with minimal coin dependence.
• Assess whether to eliminate coin counters or charge more explicitly for coin services.