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Elimination of the Penny – Are you Benefiting? (Canada)

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This applies to those of us in Canada. Recently (2012) the Canadian government announced and eliminated the penny. The Canadian mint will no longer produce Canadian pennies and the current pennies in circulation have been and will eventually be returned to financial institutions. The penny is still considered legal tender and will retain it's value indefinitely.

I'm sure if you live in Canada, or visit Canada frequently you probably know all of this already. Where it starts to get interesting is when we come across penny rounding. Penny rounding is the process of rounding the total purchase after tax down so the total does not require pennies to pay the total. This practice only applies if the person is paying with cash (this does not apply to debit [interact] or credit cards [Visa, Mastercard, American Express, etc]).

elimination_of_the_penny_what_does_it_mean_for_restaurants

The basics around penny rounding is if the last digit of the total after tax is 1, 2, 6 or 7 then the amount is rounded down to the nearest 0 or 5 cent denomination. If the last digital of the total after tax is 3, 4, 8 or 9, the amount is rounded up to the nearest 0 or 5 cent denomination.

Here are some examples:

  • $1.01 would be rounded down to $1.00
  • $5.02 would be rounded down to $5.00
  • $3.23 would be rounded up to $3.25
  • $20.94 would be rounded up to $20.95
  • $2.36 would be rounded down to $2.35
  • $9.97 would be rounded down to $9.95
  • $12.98 would be rounded up to $13.00
  • $4.49 would be rounded up to $4.50
  • $2.00 would be no change ($2.00)
  • $3.45 would be no change ($3.45)

Here is where it starts to get interesting, people who are very serious about saving money are taking both cash and debit or credit when spending money. When paying, they will wait to see the total. If the total is to be rounded down, then they will pay cash. If the total is to be rounded up, then they will pay by debit or credit. By going this, you can save up to $0.01-$0.02 per transaction.

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