Is Saving Coins a Waste of Time and Money?

by Jeffrey Strain

Do you think saving all of your spare change constitutes saving money? If you do, you may have fallen into the money jar trap. By placing your extra coins in a jar, you may actually be losing money.

Ten of thousands of people place their spare change into a jar or bank every night when they return home, thinking they are saving money.

In reality, the dynamics of saving coins have changed. By placing your extra coins in a jar, you may actually be losing money. This is called the money jar trap.

Saving coins once made financial sense

The money jar has been a traditional way to save money for generations. The concept is straightforward.

After coming home for the day, you empty your pockets or the coin compartment of your wallet and put the coins into a jar. When the jar is full, you take it to your local bank, have the coins counted, and place the money into your savings account.

While this sounds simple enough, today, the coins saved in the jar may not be worth their face value when redeemed.

The cost of cashing in those coins

The problem with the money jar game is that banks and other enterprises have figured out that they can charge individuals for taking their change. While this would have been thought absurd a few decades ago, it is common practice today.

If there is a way to make a buck, you can be sure that banks and others will try to take it.

At the grocery store

Take the convenience of changing your coins at a grocery store. CoinStar and other businesses will take your change and give you a receipt that you can use for your grocery shopping, but they’ll also take a huge fee to do so.

In effect, you are trading the face value of your coins for something worth less than face value.

Some CoinStar machines offer gift cards to specific merchants at face value (the merchants pay CoinStar a fee to have their gift cards in the machine), which means that you don’t lose money, but you lose in another way. Unlike cash, you are limited to purchasing goods at the particular store of the gift card you receive.

At the bank

More and more banks are also beginning to charge you to count coins if they accept them at all. With the current rates that banks are paying on savings accounts, you’ll likely have to leave the money you received for your coins in the bank for several years to break even with what you initially had.

What this all comes down to is that for many, keeping a coin jar is the same as losing money. Where it once was a great way to add to your savings, it often can be as wasteful as keeping a balance on your credit cards.

We have come to a time when the coin jar can cost you more money than you save.

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How to stop losing money and start saving

There are a few steps that you can take to make sure that you aren’t losing money when you think you are saving it.

1. Avoid store coin-counting machines.

You want to make sure never to have your coins changed at machines inside a grocery or similar store. By doing so, you will automatically have around 10% of your money subtracted for fees.

Often, you can take the same coins to the grocery store cashier, and they will take them for 100% of their value. Ask the store manager if this is okay before attempting it. Usually, they will require that the coins be rolled with your name, address, and phone number on them.

2. Don’t let your bank charge you for cashing in coins.

Before you take your coins to your bank, make sure they don’t charge any fees for taking the money.

The policy for changing coins at banks varies widely. Some will charge for loose coins but won’t charge if you roll the coins yourself. Find out what charges exist, and if any do, consider switching banks.

Credit unions are usually better at not charging fees for taking coins than banks.

3. Spend the coins…on needs, not wants.

If you can’t find a bank that will take coins without charging you, use the coins in your everyday use. You’re much better off doing this than letting them sit in a jar where they will ultimately lose money for you.

You can amend the money jar game to benefit your savings if this is the case.

4. Save bills instead of coins.

Instead of saving coins, move up to $1 bills for your money jar. In this scenario, you’ll be doing exactly what you have been doing, but you’ll be saving $1 bills instead of change. You don’t spend any $1 bills you receive, but any coins you receive are fine to use. That means all purchases have to be made with coins or large bills ($5, $10, or $20 bills).

Place all your $1 bills into your savings jar at the end of each day. Since banks will not charge you anything to deposit $1 bills, you avoid the fees you would get for the change and save even more money than with coins.

5. Buy stamps instead.

If you think that changing the game will keep you from saving, another way to change the coins is to take them to your local post office and use them to buy stamps out of the vending machines there. By switching the coins for stamps, you get 100% value for your coins, which is better than paying fees to have the coins traded to bills.

In the end, it’s important to remember that coins are legal currency, and you can get full face value for them by spending them a little at a time. While a large number of coins can be troublesome, there is no reason to pay a fee to have the coins deposited.