The Canadian penny – will rounding pennies save or cost you money? {An experiment}

Canadian penny rounding.

When the Federal government removed the penny from circulation on February 4th of this year, it seemed like people had a lot to say about the subject.

After talking to people and reading comments online, many seemed concerned that when their pennies were rounded up, it would add up to a lot of money over time. Others wondered if it would really work out that transactions would be rounded up half the time and down the other half to balance everything in the end.

So for the month of March I decided to do an experiment. I wanted to see how much money I would save by paying cash for purchases that would round down and by paying debit to avoid purchases rounding up.

• Ends in $0.01/$0.02/$0.06/$0.07 – pay with cash
• Ends in $0.03/$0.04/$0.08/$0.09 – pay with debit

I also wanted to see just how often bills would round up and down and to see if it does really balance out to a 50/50 split. So for the entire month, I tracked all of my purchases and this is what I found:

• 43 total transactions in March
• 6 times I paid cash so my purchase would round down
• 15 times I paid by debit to avoid having my purchase rounded up
• 20 transactions ended up with an exact total ending in $0.00 or $0.05
• 2 transactions I got mixed up and paid with the wrong tender

Paying cash saved me $0.10 and paying by debit saved me $0.25 so the whole penny experiment saved me a grand total of $0.35. Multiply that by 12 months and doing this for an entire year would save me an average of $4.20. Not exactly substantial savings, but savings nonetheless.

But what was most interesting was how often my purchases round up and down:

• 51% of my transactions ended in an exact total
• 35% of my transactions would have rounded up
• 14% of my transactions would have rounded down

So if you only look at the transactions from this experiment, it averages out to penniesrounding up 70% of the time and rounding down only 30%. Not even close to being evenly split!

So does everything balance out in the end? It’s hard to say since I only did this for one month, but I will be making an effort to watch the register and try to pay with the “right” tender. This experiment tells me it’s more likely that penny rounding will cost me money versus save me money and when it comes to saving money, every little bit helps. Even an extra $4.20 a year.

What do you think about this experiment? Was it just a fluke or does everything balance out in the end?