In the world of retail (which has to be where most cash purchases are made) people hardly ever pay with exact change, which means stores need a constant supply of change from the bank. The customer spends x amount of money and the store makes x amount of money, but the denominations have been split entropically into smaller amounts. Occasionally a customer does gather up a stack of change and spend it all at once, but in my experience this doesn’t nearly make up for the amounts of change a store is constantly making - and by “change” I mean coins AND bills up to $20, since they’re forever running out of those as well. Futhermore, retailers deposit the large notes they get from customers into the bank, but where do people put their change? Surely they can’t be spending that much on parking meters and vending machines. So where does change go? If stores keep running out of $20 notes, then those $20 notes have to be going somewhere, right?
I put mine in a bowl on the table next to my front door. If I’m going somewhere I know I’ll have to feed a parking meter, I grab a few quarters on my way out the door. When the bowl is full, I put the coins in rolls. When I’ve got enough rolls, I take them to the bank.
And the circle of life is complete.
I spend my change.
Mine goes down to the CoinStar.
Some people pay with $50 or $100 dollar bills, and some twenties are given in change. I sometimes get cash back when I use my debit card, and it’s usually dispensed in twenties. Other people write checks for over the amount of the bill to get cash back. I suspect that this is where most of the twenties go. When a register has too much cash in the drawer, then the cashier will pull out all of the hundreds and fifties, and then if there’s still too much cash, some of the twenties, and have a manager pick up the cash to make a drop (deposit from the register).
When I worked in a convenience store, it was pretty common for someone to come in and pay for one pack of cigarettes or one sixpack of the cheapest beer in coins. Sometimes these coins were silver dimes or quarters or half dollars or dollars, or wheatback pennies, or silver certificates, in which case I’d buy them out of the register at the end of my shift.
When we had too much of any particular coin or bill (in the convenience store), we’d roll them up and put them in our safe. This safe had tubes, which we measured with a sort of dipstick. We would put a roll of coins into a slot, which was labeled for that coin, or ten ones in another tube, or two fives, or one ten dollar bill in the slots that were designated for each type of change. When we needed more change, we’d press a button, and we’d get what we needed, without someone having to run to the bank, and without having to keep a lot of change in the drawer (which we could get fired for). We could only get one tube out of the safe every 5 or 10 minutes, in order to prevent robbers from getting much from us. When we got a twenty (or higher) bill, we’d have to fill out an envelope and deposit it into the safe, with no way of withdrawing it. At the change of each shift, we’d measure the levels of the various tubes to determine how much money was in the safe. Every day, the manager would open the safe, count the deposits, and make sure that everything matched up.
Coinstars and similar coin counting machines are common in supermarkets. I believe that they’ll give full value for your change if you take a credit for someplace like Amazon. My husband owns a little battery powered coin sorter that will automatically fill coin wrappers with the correct amount of change for each roll. He puts a lot of his change in that machine, and I’ll put some change in it. When we have enough rolls to make a trip to the credit union worthwhile, or if we’re going to the credit union anyway, we’ll deposit the rolled coins.
Mine goes into quart-sized glass milk bottles. I took three quarts down to Coinstar last month (or so) and wound up with over $300 on an Amazon gift certificate.
I used to work in large stores, and the usual situation was almost the opposite to Lynn’s: we always had to give out far more change than we received, which meant frequent visits to the bank. This was partly because most items were priced to end in ‘9’ (as in .49 or .79, or most frequently .99). It was a fine balancing act because cashing up all the tills was very time consuming; the ideal was to have just enough change so as to not run out, but not so much that that you spent all your time counting. We also kept a float in the safe that had to be counted daily.
In my experience, the majority of customers paid with notes, and received change. Very few paid with coins, so we were constantly replenishing.
So, to answer the OP, from my retail experiences, to the customer. Personally, a lot goes towards paying parking machines; the balance goes into a massive old whiskey jar. When there’s a sufficient amount in it, we give it to charity. Presumably, the charities bank it, and so the circle is complete.
I can’t find a totally reliable cite for this, so allow me to use The Daily Express instead.
The survey was restricted to Scotland (pop. 5,000,000, give or take) so extrapolating these numbers across the UK (pop. 60,000,000) it’s possible that £46,092,000 in loose change is lurking down the backs of UK sofas.
Plus the occasional tortoise.
I just cashed in $260 worth of change, rolled it up and took it to my bank.
I spend my change or at least try to turn it into “better” change. Small shops appreciate it, sales staff in chain stores look confused until they type it into their till.
Businesses deposit their collected stacks of $20 bills at banks, and banks reload them into their ATM’s (of course replacing damaged/worn ones with new ones from the treasury). Then we consumers go to ATM’s and withdraw the $20 bills, and the cycle begins again.
I think coins and smaller bills tend to move in the reverse direction as the OP suggests, but I these denominations short-circuit the process outlined in the previous paragraph. We consumers get $1 bills and coins from the businesses, but instead of shoveling them into the ATM, we give them back to businesses: vending machines, parking meters, exact payment for small purchases, tips, and so on.
The dollar amounts involved are necessarily smaller: you hand over a $20 bill, you don’t get $20 back in change. So if you pull $100 out of the ATM, it’s not like you’ll be trying to spend $100 worth of coins and small bills during the next week or two.
If someone is really interested, it might be cool if they tracked for some period (1 week?) what they did with the coins and $1/$5/$10 bills they received as change during business transactions
I work at the bank end of this equation and know that businesses are always making change orders to keep themselves stocked. And the bank loves it. For the larger businesses, we charge a small fee to make change orders (like .05% or something), but when a business is getting $1000 in change each week, that adds up to $5 a week, multiply that by how many businesses are doing it… it really adds up. But it’s supply and demand. The business needs the money, we’ll charge them a fee for it. We had an upset customer once who complained that his business was getting charge for change. Our banker put it this way to him: “I know that at your store, you don’t sell the shirt I need at wholesale cost. You mark it up and provide it to me at a fee. We’re a business too, and our business is money. We’ll sell you money, but at a slight mark up.”
You could certainly make money by just giving change, if you had enough volume.
Years ago The Onion had a “what do you think” column in which they printed opinions about the outrage over ATM transaction fees. One of the respondents said “I don’t think it’s fair for a bank to charge a fee for a service it provides.” 
In the laundromat business, the coins pretty much just flow from the change dispenser (put in bills, get coins) to the washers and dryers (put in coins, get clean clothes) and back into the change dispenser. We’d come in and empty the washer & dryer coin boxes back into the change dispensers, and take the bills from the change dispenser ($1 & $5 in those days) to the bank.
We did have some leakage (~10%) of coins out the door, but we believed that was due to there being a city bus stop out front and we were a handy source for coins for bus fare (exact change required). The industry norm was very close to net zero on coins in or out.
To really answer the OPs question … Smaller denominations (bills or coins) are returned to circulation either directly by being re-spent, or are returned by consumers to the banking system.
I used to be an almost all-cash guy. My threshold for using a CC was $50. If I started a bunch of shopping with 5 20s, after 3 purchases I’d have $15 or so in smaller bills and coins. Which I’d then spend during purchases 4 and 5. Then I’d be too low on smaller stuff to use any on the next purchase, so a stack of 20s it was, accompanied by change coming back.
Net net I usually carreid $30 or so in smaller bills, plus however many 20s. My stash of smaller stuff ebbed & flowed, but it wasn’t like I was just dumping it in a pile at home.
Nowadays I use almost pure CC for retail. I still carry a couple 20s and use cash occasionally. The change sits around longer before being re-used, but the process is the same, just slower. The folks with the bucket of coins at home are simply re-enacting the same process, only very slowly.
If you go the e-certificate route, are there *any *expenses? Activation fee for the card? Monthly service fee for inactive cards? No way to add to the card so you end up losing the last $5?
Or is it really that straightforward–put in $300 worth of coins, get to spend $300 at a retailer?
I had a big plastic bank shaped like a pepsi bottle where I was putting mine. I just cashed it in a few weeks ago. It had a 122 lbs of coins in it and likely I had been saving for well over a decade.
For those who like to guess, I’ve put the final total in a spoiler.
Turned out to be 1707.19 dollars
I spend all my bills eventually, so they go back into the registers whence they came. My coins go into a jar, and then ultimately back to the bank, three liters at a time.
I have a coin sorter with slots for each denomination of coin. I roll up any of them when I accumulate enough, except for quarters, which I use for the laundry machines in my apartment building. And then when I have a few dollars in rolled coins, I deposit them. I actually have to buy quarters to have enough for laundry. So I don’t accumulate coins.
I think that some people throw out change, pennies especially, and a lot just let it accumulate without ever turning it in. (That’s the reason that Coinstar’s fees seem reasonable to some people, although they seem crazy to me.)
You didn’t ask but ------- a little secret on CoinStars is to check any dimes, quarters or halves it rejects. The way they are set, the 1964 and earlier stuff reads funny to them and head right for the reject slot. With silver right now going 8 times face, even a few bucks that way can add up to something worth a trip to a coin shop. This is especially important if you are dumping in any coffee cans from older relatives or neighbors where the chances of some silver is greater.