Do Banks Replace Ripped Bills and How Does It Work?

United States currency can become damaged, often referred to as “ripped bills.” This damage includes tears, excessive wear, soiling, or defacement. Banks frequently replace such currency, though the ability to exchange it depends on the extent of the damage.

Exchanging Damaged Currency at Banks

Local commercial banks often exchange damaged currency that meets certain conditions. This is typically for minor damage, such as small tears, minor defacement, or general wear and tear from circulation. If a bill is only slightly ripped or soiled, and its authenticity and denomination are clearly identifiable, a bank teller can usually exchange it for a new one.

The process generally involves presenting the damaged bill directly to a teller at your bank branch. Banks assess the currency on the spot, confirming that it is clearly more than half of the original note and does not require specialized examination to determine its value. However, banks generally do not accept currency that is severely damaged or “mutilated,” as these require a different, more involved process.

Key Conditions for Bill Exchange

The criteria for exchanging damaged currency are specific, whether at a financial institution or through the Bureau of Engraving and Printing (BEP). A general rule for redemption is that more than half of the original surface area of the bill must be present and identifiable. This “51% rule” is a common guideline to prevent fraudulent exchanges where someone might try to redeem both halves of a single torn bill.

For a bill to be eligible, it must also retain sufficient remnants of its security features, serial numbers, and denomination. It is important to distinguish between “damaged” currency, which includes minor tears, soiling, or defacement, and “mutilated” currency. Mutilated currency is severely damaged, perhaps by fire, water, chemicals, or decomposition, to the extent that 50% or less of the note remains, or its value is questionable. Banks typically handle only the former, while the latter requires submission to the Treasury.

Submitting Severely Damaged Currency to the Treasury

When currency is too severely damaged for a bank to exchange, such as bills that are burned, disintegrated, or missing substantial portions, it must be sent directly to the Bureau of Engraving and Printing (BEP) for examination. The BEP’s Mutilated Currency Division provides a free redemption service.

To submit a claim, you should carefully package the damaged currency to prevent further deterioration. You must include a detailed letter explaining how the currency became damaged, an estimated value of the currency, and your contact information. For claims of $500 or more, electronic payment is required, so you should also include your bank account and routing numbers for a U.S. bank. The BEP offers a specific form, BEP Form 5283, which must be completed and included with the submission. Submissions can be mailed to specific addresses provided on the BEP website, and processing times can range from approximately six months to three years due to the volume and precise nature of the work.