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What Are Fractional Coins?

Many nations utilize fractional coins as a part of the overall process of issuing and controling currency in a nation.
The penny is 1/100th of a US dollar.
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  • Written By: Malcolm Tatum
  • Edited By: Bronwyn Harris
  • Last Modified Date: 10 August 2014
  • Copyright Protected:
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    Conjecture Corporation
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Fractional coins are minted coins that are created with a value that amounts to some fraction of the basic currency unit used within a given country. Typically, this means that the coins represent a value that is equal to some specific amount of the lowest denomination of paper money issued as legal tender within that nation. Fractional currency coins make it possible to engage in purchases that cost less than the amount of that lowest paper currency, and can be used in conjunction with the paper money to conduct cash transactions.

Many nations utilize fractional coins as part of the overall process of issuing and controlling currency within a nation. Coins of this type are often considered important to the trade process, making it much easier for vendors to supply correct change for any purchases that do not equal the face value of any unit of paper money. In addition, collecting fractional coins issued by different nations and from different time periods is a common pastime that can also be very lucrative, especially if the coins in question are no longer in circulation and are considered very rare.

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The range of fractional coins issued in a given country will depend on the range of cost units considered to be helpful within that particular market. For example, several different fractional coins are in common circulation in the United States, with all of the coins representing a fraction of the basic paper currency unit, the United States dollar. The US penny represents 1/100 of a single US dollar, while the nickel represents 5/100 of that same basic unit of paper currency. The dime represents 10% of a dollar, and the quarter represents 25% of the dollar. A fractional coin that is used on occasion is known as the half-dollar, and has a value of 50% of the US dollar.

Along with fractional coins that represent a portion of the most basic paper currency issued within a country, there have also been instances when coins equal to or even worth more than the basic paper currency unit were issued. For example, the United States Treasury has from time to time issued coins that were equal to the US dollar bill, as well as a two-dollar coin. Over the years, both fractional coins and coins traded at more than the assigned value of the basic paper currency unit have been issued in nations like Canada, the UK, and various nations in Africa.

While the use of fractional coins is still popular around the world, the ability to complete transactions with the use of debit cards has made it possible for consumers to carry fewer of the coins, even for traditional purposes such as buying time at a parking meter. With technology now making it just as easy to manage inexpensive tasks such as using a pay-per-page printer or fax machine, purchasing a beverage from a soft drink dispenser, or feeding a parking meter, there has been some discussion from time to time of ceasing production on some of the smallest denominations of the fractional coin. The move is generally met with opposition by both consumers and businesses that desire to continue making it possible for their customers to pay in exact amounts using a combination of paper currency and coins.

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