Why paying in pennies may land you a fine!

Whatever you do, don't hoard your cash and pay your bills like this...

“If you look after the pennies, the dollars will look after themselves”; the words of American industrialist J. Paul Getty and advice we could all occasionally benefit from heeding. Unless your name happens to be Jason West that is.

Yes, this disgruntled Utah man had obviously been listening to Getty’s proverb a little too intently when he stormed into his local clinic to reluctantly pay a $25 medical bill. And unfortunately for West, his pugnacious penny payment landed him in something of a pickle with the police...

‘Do you take cash?’

Mr West had disputed the $25 charge issued by Basin Clinic, Utah as he claimed he had settled it months ago. So when he turned up at the clinic in person and still didn’t manage to get the bill dropped, he lost his rag.

West politely enquired as to whether the clinic took cash, which – unfortunately for this particular receptionist – they did. Presumably delighted with the answer, the disgruntled patient then proceeded to dump 2,500 pennies onto the counter, telling the cashier that he was more than happy to wait around while the change was counted.

The clinic obviously didn’t see the funny side of West’s antics as they quickly called the police to report the penny-pushing patient, claiming that he had been throwing coins at staff. The police confirmed that pennies were strewn about the clinic floor and desk and decided to charge West with ‘disorderly conduct’. If he is found guilty West will face a fine of $140 – or 14,000 pennies.

West had something of a simple reply to the clinic's accusation when questioned by a local paper, “that’s just the nature of pennies... they’re round”, he said.

Penny payment protocols

The clinic confirmed that it would have been happy to accept West’s portly payment, if only he hadn’t transferred it to the teller in such an aggressive fashion. But they would have been well within their rights to reject the 2,500 pennies.

While American law states that US coins or currency (including Federal Reserve notes and national bank notes) are legal tender and hence have to be accepted for payments of debts, dues, charges and taxes, an individual or organisation can still put reasonable conditions on the manner in which they will accept the payment. As long as they do not contravene state law, that is. So in theory the clinic almost certainly could have told West to gather up his pennies and pull out a bill or two.

Internationally, American coinage law is fairly unclear, as most countries set out specific regulations for settling bills in coins. The Eurozone limits coin payments to a maximum of 50 pieces while Canadian law states that payment in 1c (cent) pieces must not exceed 25c. Australia places their 1c limit at 25c and while New Zealand no longer has any 1c or 2c pieces, there is a $5 threshold for payments using 10c, 20c and 50c silver coins.

Here in the UK, the limit for paying in 1p or 2p coins is 20p, while 5p and 10p pieces are legal tender up to £5 and 20p and 50p pieces are acceptable for payments up to £10. Gold sovereigns are also legal tender with a face value of £1. But in reality – due to the high value of gold – they are usually bought and sold as bullion.

In England and Wales £5, £10, £20 and £50 notes are all legal tender for payment up to any amount. However they are not legal tender in Scotland or Northern Ireland.

Legal tender

This discrepancy between paying in notes across the UK arises because of the narrow and largely unknown technical definition of legal tender in the UK. Officially, legal tender law only really affects court cases involving non-payment, as a debtor cannot successfully be sued if payment is offered in legal tender.

This has no impact on ordinary transactions, which can take place in any form – whether notes, coins (legal tender) or even stamps – so long as both parties agree.

As a result, a debtor in Scotland or Northern Ireland could have their payment legally rejected if they offered it to the court in notes rather than coins. Though practically, I can’t imagine this ever happening!

But being turned down at the till with a handful of metal isn’t the only reason why you shouldn’t hoard your savings in coins...

Your cash is eroding

Earlier this week the Office for National Statistics announced that the Consumer Prices Index measure of inflation stayed at 4.5% throughout May. This indicates a continued rise in prices at more than double the target rate of 2% set out by the Bank of England. As a result of these jumping prices the actual spending power of any physical coins or notes you are holding onto is eroding every day. But there is a way to fight back against this erosion.

By stashing your cash away into a savings account, you can earn interest on your nest-egg and offset the impact of rising prices. Here’s a rundown of some of the best deals around at the moment...

Alternatively, if you get hold of a cash ISA for your savings, you won’t even pay tax on the interest you receive. And why should you, when as we reported earlier this month every £1 you earn at work before lunch goes straight to the taxman?

For a full list of all the top accounts for your cash head over to our savings centre or ISA centre now.

Are you a hoarder?

What do you do with your spare pennies? Are you a hoarder?

Let us know in the comment box below.

More: Compare savings accounts and ISAs | What we can learn from the people of Richmond | Why now is a good time for a bond