Money Mystery Uncovered: When Good Money Goes Bad

Money does not last forever, especially when it gets tattered, torn or wet. There are rules to determine when cash and coins are no longer fit for use and what happens once it leaves your hands (spoiler alert: you get full, trade-in value). 

We’ve all had them in our hand, or wallet, at one time or another — dollar bills with tattered corners, random scribbles or tears taped together.

When does money become too damaged to use? And what happens to it?

Major Damage

The U.S. Treasury Department has rules and procedures. Currency can be “mutilated beyond use” in any number of ways — by fire, water, chemicals or explosives, animal, insect or rodent damage, and petrification or deterioration from being buried. It can be exchanged at face
value if:

  • More than 50 percent of the bill still exists, or
  • 50 percent or less exists, and “the method of mutilation and supporting evidence” satisfies the Treasury that the missing portions were totally destroyed.

In these cases, owners of mutilated currency can file a claim with the Bureau of Engraving and Printing in Washington, D.C. The bureau will redeem partially destroyed or badly damaged currency after verifying its value.

Minor Damage

There is also a level of damage that falls between “fit” for use and mutilated, per the Treasury: paper currency that is badly soiled, dirty, defaced, disintegrating, limp, worn out or torn and clearly more than one-half of the original note.

If the bills do not require special examination to determine the face value, these notes may be exchanged at a local bank branch for their full value.

Common types of damaged currency include:

  • Portion missing. If the bill has a large section missing, you can still get it exchanged for its face value if the denomination and serial number identifies it as legal tender.
  • Torn and taped. If the serial numbers match on both pieces, it can be exchanged at face value.
  • Writing. There are no specific guidelines on taking a bill out of circulation because of what is written on it, but common sense should prevail. If the word or phrase is clearly inappropriate or offensive, the bill should be set aside and exchanged so it can be removed from use.

Karen Morgan of PNC’s bank operations department has a general rule of thumb for anyone wondering if they should replace damaged bills in their possession.

“If the bill’s condition makes it so you don’t want to carry it in your wallet or pocket, it’s probably time to exchange it so the Federal Reserve Bank can properly dispose of it,” she said. “The same is true if the note can’t be used in a vending machine.”


                                                                                                                            (Source: Federal Reserve)

Fitting End to Unfit Cash

Currency that is deemed unfit by PNC’s cash suppliers and automated sorters, or exchanged by customers, is sent to the Federal Reserve Bank for processing. The Fed exchanges new or fit notes for the old ones, and destroys unfit or damaged currency by one of two ways: 

1.  Shred: Bills that are torn, tattered, limp or soiled are typically shredded. Though handwritten messages are not necessarily enough to make a note “unfit,” the Fed’s automated sorters will detect defaced notes and pull them out of circulation for disposal.

2.  Burn: Money that is contaminated – for example, the notes are moldy due to water damage or having been buried – is burned. Why? The wet notes are ideal breeding grounds for mold spores. After Hurricane Sandy in 2012, the Fed adopted special guidelines to help expedite the removal of large volumes of soaked currency from circulation.

Wish for Dry Coins

Coins are not immune to contamination, either, and usually require special attention in order to process and determine their value. For example, coins collected from wishing wells or fountains and placed in sealed containers for storage and shipping also can produce mold spores. Or a well-intentioned customer may have wrongly used chlorine bleach to clean the coins before sealing the containers. 

“Once we received sealed buckets of wet coins that had been sitting for years — enough to fill two armored cars,” Morgan said. “Some of the buckets went into our cash vault and made our cash vendor employees ill when the lids were removed.”

Now, PNC does not accept wet coins and helps refer customers to vendors who specialize in drying and decontaminating coins.

“Anytime there is contamination of any kind to currency or coins, some special handling will be required,” Morgan said. “We don’t want any situation that might create a health issue or inconvenience for our customers or employees. We take special care in those situations.”


Don’t try to clean wet coins, PNC’s Karen Morgan advises

Currency Notes

  • Every year, the U.S. Treasury handles about 30,000 claims to redeem mutilated currency valued at more than $30 million.
  • Currency paper is composed of 75 percent cotton and 25 percent linen.
  • It would take about 4,000 double folds (first forward and then backwards) before a note will tear.

(Source: U.S. Treasury Department)