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21 April, 2009

no more 5 cents coins?

Australia may follow New Zealand on getting rid of 5 cents coins from circulation. In Australia, the 1c and 2c pieces were phased out in 1993 following New Zealand's lead. (New Zealand removed 1 and 2 cents coins from circulation in 1990.) The 5c coins in New Zealand were withdrawn from circulation in 2006. It looks like Australia will follow, according to news report.

For those who are not familiar with the system, what do we do when paying for items ending at 99 or 98 cents? If you pay by cash, they round it up at cash register since there's no 1 or 2 cents coins in circulation. You lose one or two cents. (to Don: a good reason why people should pay by plastic cards instead of cash.)

Okay we understand why shops like to price at something like $9.99 or $19.99, those prices sound better than $10 or $20. However in real life, many shops like to have prices ending with 98 cents. In such case, when you buy one item with cash, you lose 2 cents. To some smart shoppers, they would buy two items and make the ending 96 cents, and hence rounding it down 95 cents, and the shoppers would think that they make 1 cent profit. However, they pay more, and the shop sells more items. Okay, the real and dirty reason for shops who like to price their items with 98 cents ending is simple: Shops do not pay the GST (tax) on rounding. In most cases, they are either making 2 cents tax free, or sell extra items when shoppers are paying with cash.

(to Don: still not convinced why you should shop with your Credit Card or debit card? You earn rewards points!)

news source: Five cent coin not worth the hassle, retailers say (Sunday Herald Sun, 19 April 2009)

IT'S Australia's most shunned shrapnel, the 5c coin - and if shopkeepers and retailers had their way, the echidna-clad currency would be ditched.

They say the coin should go the same way as the near worthless 1c and 2c pieces, phased out in 1992, and the New Zealand 5c coin, dumped in 2006.

Supermarket Woolworths now stocks nothing on its shelves worth 5c, while a register search of Big W products found only one item costing that much -- a school exercise book on sale once a year.

Melbourne City parking meters do not accept the coins and even sweet seller The Original Lolly Store has abandoned the 5c price tag, with the cheapest lolly at its Melbourne outlet selling for 15c.

Deakin University marketing professor David Bednall said the nation could easily adapt to living without the pocket cloggers, which make up $186 million of Australia's hard currency.

Barbara Martin, of Queenscliff's Seaside Lolly Shop, which often sells single lollies by weight for 5c, said the coin was out of date.

"I think it should be discontinued like it is in New Zealand," she said.

"It's just a pain."

Ms Martin said customers would not mind paying in 10c increments.

"Prices will either go up or down by 5c, so it might benefit shoppers sometimes," she said.

"It would all even out."

But Ian Richards, of Martins Paint and Hardware in Richmond where small washers and screws sell for 5c, said the coin still had some worth.

"It would probably be inflationary if you did phase it out," he said.

"There are still things in that price category. The coin is still pretty viable."

He also said the $9.95 pricing technique, to make products seem cheaper, would be forced to change.

The 5c coin was produced for the introduction of decimal currency in 1966.

Though removed from circulation, the Australian 1c and 2c coins remain legal tender.

The only currency to have its legal tender status removed was the Holey Dollar and Dump, recalled in 1822.

Posted by Antony on 21 April 2009 10:54 PM | newstalk
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comments
If I shop with my debit card, then the bank gets to know all sorts of information about where I shop and what I buy. No thanks; my privacy is worth one or two cents to me. And again, I don't get rewards points on that thing.
Posted by Don_HH2K on 22 April 2009 12:42 PM.
The bank only knows where you shopped, not what you bought. Time to upgrade your debit card to a credit card with rewards points?
Posted by Antony Shen on 22 April 2009 1:23 PM.
They don't need to know where I shopped either. Besides, they can extrapolate plenty of data just from knowledge of where I shop.
Sorry, but I don't have any incentive to upgrade to a card that encourages me to spend wildly in pursuit of rewards points that will only bankrupt me before they're useful.
Posted by Don_HH2K on 23 April 2009 11:18 AM.
You've made up your mind that the reward program would "encourage you to spend wildly" before even give it a try?
Posted by Antony Shen on 23 April 2009 1:09 PM.
Credit caused an economic meltdown, I know that much.
Posted by Don_HH2K on 23 April 2009 1:46 PM.
But not on personal Credit Cards.
Posted by Antony Shen on 23 April 2009 2:01 PM.
There are credit cards that are in fact a discount cards. You get the discount when using it, hence saving you even more!
Posted by Antony Shen on 26 April 2009 2:49 PM.
Quite interesting and informative. Thanks for sharing.

Posted by Computer Repair New York on 17 May 2009 6:39 PM.
Awesome article! I have gradually become fan of your article and would like to suggest putting some new updates to make it more effective.

Posted by Epson Continuous Ink Systems on 25 May 2009 4:01 PM.
nicely written!! Good

Posted by Personalized Golf Gifts on 29 May 2009 6:46 PM.
I appreciate it very much, at least I know from it someone is reading the contents I have here.
Posted by Epson Continuous Ink Systems on 8 July 2009 10:54 PM.
Iím sorry to be so late. I read this article after a year has passed. Then, how about the development of this 5 cents withdrawal plan?
Posted by Jacob Sebastian on 7 August 2010 4:13 PM.
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