Could saving coins be a waste of time and money?

The Money Jar Trap

by Jeffrey Strain


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Ten of thousands of people place their extra change into a jar or bank every night when they return home thinking that they are saving money. In reality, the dynamics of saving coins has changed over the last 10 years so that by placing your extra coins in a jar, you may actually be losing money. This is the new money jar trap.

The money jar has been a classic way for people to save money for generations. The concept is easy. After coming home for the day, you simply empty out your pockets 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 problem that has arisen 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 of as absurd a decade or two 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.

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 have begun to offer gift cards to certain 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.

More and more banks are also beginning to charge you to count coins if they will accept them at all. With the current rates that banks are paying on savings accounts, you'll likely have to leave the money your received for your coins in the bank several years just 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 where the coin jar can actually cost you more money than you save.

There are a few steps that you can take to make sure that you aren't actually losing money when you think you are saving it. First, 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 times, 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.

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.

If you can't find a bank that will take coins without charging you, then 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.

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 dollar bills). At the end of the day, you place all your $1 bills into your savings jar. 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.

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 switched 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.


Jeffrey Strain is the owner of Saving Advice, a website dedicated to saving you money, and also writes the daily updated blog Personal Finance Advice

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