Money gets worn down over time as it circulates and changes hands. Wallet friction, washing machines, and general handling all contribute to the degradation of paper currency. At some point, a bill can become so damaged that it’s no longer suitable for circulation. This raises an important question: How much of a $100 bill can be missing before it’s no longer valid legal tender?
What are the rules for damaged or incomplete currency?
In the United States, the Bureau of Engraving and Printing and the Federal Reserve set the standards for determining if a damaged bill is still redeemable. According to their rules:
- At least 50% of the original note must be present
- The note must be clearly more than half of the original bill
- The note must not be badly defaced or torn into small pieces
As long as those criteria are met, a partial bill can be exchanged at a bank for its full face value. For example, if you had a $100 bill where 60% remained intact, a bank would redeem it for the full $100.
The 50% rule
The 50% policy provides a clear numeric threshold for redeeming damaged money. As long as you have more than half of the original bill, it can be redeemed. However, the condition and appearance of the bill also matter.
Even if a bill is 51% intact, if the remaining portion is extremely worn, taped together, or otherwise highly defective, the Federal Reserve may still reject it. So while 50% is the stated minimum, it’s not an absolute guarantee. The bill still needs to maintain its essential integrity.
Discretion of the Federal Reserve
The Federal Reserve uses its discretion in determining whether a damaged bill should remain in circulation. If a bill’s condition has deteriorated too far, they will remove it from the money supply. This is done to maintain public confidence in the currency.
So a $100 bill could theoretically have 49% of its original note missing and still be considered valid if the Federal Reserve deemed its condition adequate. On the other end, a bill with 51% left could potentially be rejected if it was excessively damaged.
What are common ways currency gets damaged?
There are many types of situations that can lead to damaged money:
Wallet and pocket wear
Bills that get repeatedly folded and stuffed into wallets or pockets are susceptible to wear. Creases can split and holes can form along the folds if the currency is thin and worn.
Washing machines and dryers
Loose change and bills accidentally sent through the laundry can come out crumpled, torn, or even shredded if they get caught in the machinery.
Water damage
Currency left in pockets when doing laundry can become wet and begin deteriorating. Floods and water leaks can also cause extensive damage to submerged bills.
Fire, heat, or chemical exposure
High temperatures or chemical reactions can scorch or disintegrate bills, sometimes leaving only a portion of the note intact.
Animal damage
Pets may chew up money if it’s left within their reach.
General circulation
With enough time and handling, currency will naturally begin breaking down as it moves through commerce. Bills become limp, worn and soft as paper fibers weaken.
Examples of damaged currency worth full value
Here are some examples of damaged money that would likely be redeemable for full value with over 50% of the note remaining:
- A $100 bill torn diagonally in half
- A $100 bill missing its left side up to the centerfold line
- A $100 bill with singe marks and discoloration but at least 60% still intact
- A $100 bill that has been crumpled up but smoothed out again
Not considered badly defaced
Currency with damage like the above should not be considered badly defaced or extremely mutilated. The essential identity and integrity of the bills are still evident. There are no perforations, severe burns, or large portions of missing note. So despite their imperfect state, they should still be redeemable.
Examples of damaged currency not eligible for redemption
Here are some examples of damaged currency that likely would not be eligible for full redemption since they lack the necessary completeness:
- A $100 bill that’s been ripped into several pieces
- A $100 bill missing its serial number and over 25% of the note
- A $100 bill that is more than 90% burnt or discolored
- A $100 bill that has been taped back together from multiple smaller pieces
Considered non-redeemable
Bills damaged to this excessive degree are highly defective. They lack important identifying features and their genuineness is difficult to determine. The Federal Reserve would not accept these notes back into circulation.
How to redeem damaged or incomplete currency
If you have damaged or incomplete paper currency, here is the process for redeeming it with the Bureau of Engraving and Printing:
- Gather all the portions of the damaged bill and tape them together if necessary.
- Fill out an application for reimbursement found on the Bureau of Engraving and Printing website.
- Mail the damaged currency along with the application to the Bureau of Engraving and Printing.
- An examiner will evaluate the currency and determine if it meets the minimum redemption requirements.
- If approved, a check will be mailed to reimburse you for the currency’s full original value.
Be sure to provide identification
Make sure to provide your name, address, phone number, and other contact information when submitting damaged currency for reimbursement. The Bureau needs to verify your identity when processing claims.
What happens to damaged money taken out of circulation?
Currency deemed unfit for circulation by the Federal Reserve is removed from the money supply and destroyed. The bills are shredded and then incinerated at secure facilities. The Bureau of Engraving and Printing handles the disposal process.
Destroying unfit currency ensures that defective bills don’t end up back in circulation. It also guarantees the bills are disposed of properly without compromise.
Strict controls for money destruction
The mutilation of U.S. currency is closely regulated with strict inventory controls and security measures. All currency slated for destruction must be accounted for and witnessed by special agents of the U.S. Secret Service.
The total amount destroyed is reported annually by the Federal Reserve. In 2020, around $193 million in unfit U.S. currency was destroyed.
Does damaged foreign currency get reimbursed?
The Bureau of Engraving and Printing does not reimburse damaged or mutilated foreign currency. Only bills issued by the Federal Reserve and the U.S. Treasury can be redeemed.
For foreign banknotes, you would need to contact the central bank or currency issuing authority in that nation. Each has their own rules and process for evaluating damaged money claims.
Varies by country
Some foreign banks may not reimburse any damaged currency, while others may have more relaxed policies than the U.S. It’s also common for countries to stop accepting old paper bills once new versions with enhanced anti-counterfeiting features are released.
So if you have damaged foreign bills, your best recourse is checking directly with the central bank of that country for their specific policies.
Can you repair torn or damaged bills yourself?
While you can physically tape together a torn bill yourself, this is not recommended for redeeming it. Any attempt at self-repair will likely render the currency no longer eligible for reimbursement.
U.S. regulations prohibit trying to alter or mutilate currency in a way that conceals damage. Taping over tears is considered concealment, even if done with good intentions. That bill then has no shot at being redeemed.
Let the Bureau handle damaged bills
For the best chance at getting reimbursement, send any torn or damaged currency to the Bureau of Engraving and Printing in its existing condition. Don’t try to alter or repair it. The Bureau’s experts will determine if it qualifies for redemption in its present state.
Self-repaired bills must be clearly labeled as such when submitting a claim. But the chances of these being accepted are very slim.
Are there any exceptions or special cases?
While the 50% rule and other criteria are quite firm, the Bureau of Engraving and Printing can make exceptions in some special circumstances. This is determined on a case-by-case basis.
Contaminated currency
Bills deemed a biohazard risk or a potential health threat may be redeemable even if considerably more than 50% is missing. Common examples are currency recovered from fire, flood, or sewage contamination.
National emergencies
After major natural disasters like hurricanes, the Bureau sometimes relaxes its typical standards for a limited time to ease the financial burden on victims.
Circumstances out of your control
If currency was damaged due to unforeseen disaster, theft, or other circumstance completely beyond your control, exceptions may occasionally be made.
Could tampering or defacement make a bill not redeemable?
Intentionally tampering with currency in any way that alters or conceals its appearance may forfeit your right to redeem it. This includes:
- Drawing or stamping on bills
- Adding stickers or labels
- Perforating or cutting the edges
- Holes punched through numbers, symbols, or other important markings
Defacing currency undermines its integrity. Heavily tampered bills may be taken out of circulation and not be reimbursed even if over 50% remains.
Reasonable wear and tear is expected
Normal wear and aging, however, does not disqualify a bill. Reasonable fold marks, dirtiness, limpness, and other flaws from routine circulation do not count as defacement or tampering.
Conclusion
For damaged or incomplete currency to retain its full value, at least 50% of the original note must be present. But appearance also matters. Bills must maintain their essential integrity and not be excessively worn. Ultimately, the Federal Reserve uses its discretion in determining if a damaged bill stays in circulation.
While you can tape together torn bills yourself, it’s best not to attempt repairs if you intend to redeem the currency. Let the Bureau of Engraving and Printing handle evaluating damaged money.
With some common sense and by following the proper procedures, you can successfully claim reimbursement for damaged paper money that’s accidentally come into your possession.