How Damaged Can a Dollar Bill Be and Still Be Accepted?

United States currency is designed for durability, yet bills can sustain damage through various means such as tears, burns, or water exposure. Understanding the criteria for redeemable currency and the appropriate channels for exchange is important for anyone holding damaged money.

Understanding Redeemable Currency

A dollar bill is generally considered redeemable if it meets specific criteria established by U.S. government agencies. The primary factor is often the presence of more than 50% of the original note. This threshold helps prevent fraudulent attempts to redeem multiple portions of a single bill. If more than half of the bill is present, along with sufficient remnants of any security features, it may be redeemed at full value.

Currency can suffer damage from various sources, including fire, water, chemicals, explosives, and even animal or insect activity. Even if less than 50% of a bill remains, it might still be redeemable if there is convincing evidence that the missing portions were completely destroyed. For instance, if a bill was partly consumed by fire and the remaining portion is less than half, but the circumstances demonstrate the rest was incinerated, it could still hold value. The presence of identifiable security features and serial numbers is also a strong indicator of a bill’s authenticity and redeemability.

Exchanging Minorly Damaged Bills

For dollar bills with minor damage, such as small tears, excessive soiling, or slight defacement, the process for exchange is relatively straightforward. Most commercial banks will accept these bills. These types of bills are often referred to as “unfit currency” because they are no longer suitable for circulation due to their physical condition, but their value is not questioned.

To exchange a minorly damaged bill, you can present it to a teller at your local bank. The bank will assess the bill based on its condition and the criteria for redeemability. If the bill is clearly identifiable and largely intact, the bank will typically exchange it for new currency immediately.

Submitting Severely Damaged Bills

Currency that has sustained significant damage, such as being burned, disintegrated, or having more than 50% missing, cannot typically be exchanged at a local bank. Such “mutilated currency” requires submission to the U.S. Bureau of Engraving and Printing (BEP) for examination.

To submit a claim, you must send the damaged currency to the BEP’s Mutilated Currency Division by mail. The submission must include a completed BEP Form 5283, which is an Owner’s Affidavit of Partial Destruction, along with a letter detailing the estimated value of the currency, your contact information, and an explanation of how the damage occurred.

If the claim is for $500 or more, electronic payment to a U.S. bank account is required, so banking information should be included.

When packaging the currency, disturb fragments as little as possible to prevent further damage. If the money was found within a container, like a wallet, it is recommended to send the entire container to the BEP. Currency experts at the BEP carefully examine each case, and the Director of the BEP has the final authority on redemption decisions. The processing time for claims can vary significantly, ranging from approximately six months to three years, depending on the complexity of the case and current workload.