Can You Use Half a Dollar Bill?

Paper currency can become damaged through various circumstances. Such damage often leads to questions about a bill’s continued usability and how it might be exchanged or redeemed. Understanding the proper procedures for handling damaged currency is important.

Understanding Damaged Currency

United States paper currency is categorized based on the extent of its damage. Currency that is worn, dirty, defaced, limp, or slightly torn, but still clearly identifiable and mostly intact, is considered “unfit” currency. These bills retain their full face value and can be used in transactions or exchanged at financial institutions.

However, currency can be damaged to a greater degree, leading it to be classified as “mutilated.” This classification applies when a note is so severely compromised that its value becomes questionable, or when less than half of the original note remains. If a bill has more than 50% of its original identifiable form, along with sufficient remnants of security features, it may be redeemed at face value. If 50% or less of the note is present, redemption is possible only if there is satisfactory evidence that the missing portions were completely destroyed, preventing any fraudulent claims.

Exchanging Damaged Currency

For currency that is slightly damaged or “unfit,” such as bills with minor tears or general wear, the exchange process is straightforward. Most commercial banks accept such currency from their customers. You can deposit these bills into your account or request new notes. Banks then process this currency out of circulation through the Federal Reserve System.

When presenting a torn bill, keep all pieces together, if possible, to demonstrate that more than half of the original note is present. Commercial banks are the primary point of exchange for these cases. The Federal Reserve does not directly accept deposits of mutilated currency from the public. If a bank is unable or unwilling to exchange a damaged bill nearing the “mutilated” threshold, further steps may be necessary.

Submitting Mutilated Currency

When currency is severely damaged to the point of being classified as “mutilated,” it requires a specialized redemption process through the Bureau of Engraving and Printing (BEP). This service is available for individuals and institutions. To initiate a claim, you must complete and include BEP Form 5283, a request for examination of mutilated currency. This form collects essential information, including your contact details, the estimated value of the currency, and a detailed explanation of how the damage occurred.

For claims exceeding $500, direct deposit into a United States bank account is required, so banking information must be provided. Careful packaging of the damaged currency is crucial to prevent further deterioration, and do not disturb fragments more than necessary. If the currency was damaged within a container, it should remain in that container when submitted. Avoid taping, gluing, or laminating the currency, as this hinders the examination process.

Submissions can be mailed to the BEP’s Mutilated Currency Division via USPS or private courier, or delivered in person at their Washington D.C. facility. Processing times for these claims can range from six months to 36 months, depending on the complexity and current workload.