What to Do if Money Rips or Is Damaged

When paper currency becomes damaged, it can be frustrating, leading individuals to wonder if their money has lost its value. United States currency, despite its durability, can suffer damage from accidental tears to severe environmental exposures. Understanding how to properly handle and redeem such currency is important for retaining its financial worth. This guide provides practical steps and insights for exchanging or claiming damaged money, ensuring its value is not lost.

Understanding Damaged Currency

Damaged currency is categorized into “unfit currency” and “mutilated currency.” Unfit currency refers to notes that are worn, dirty, limp, torn, or defaced, yet remain clearly identifiable and largely intact. This type of damage typically involves more than half of the original note being present, with its value easily determined without specialized examination.

In contrast, “mutilated currency” describes notes that have sustained severe damage, making their value questionable or with more than half of the note missing. Such severe damage can result from fire, water, chemicals, explosives, animal or insect activity, or even deterioration from being buried. For full value redemption, either more than 50% of the identifiable note must be present with security features, or if 50% or less remains, evidence must show the missing portions were destroyed. Counterfeit money is not considered damaged currency for redemption and cannot be exchanged.

Exchanging Currency at a Bank

For slightly damaged currency, such as notes with minor tears, dirt, or wear, commercial banks are the most accessible option for exchange. Most commercial financial institutions will accept currency that is clearly identifiable and has more than half of its original body intact. This includes notes that are dirty, limp, or have small rips that do not obscure key features like serial numbers or security threads.

Present the damaged note to a teller at any commercial bank branch. Banks usually replace these notes immediately with new, undamaged currency, provided the “unfit currency” criteria are met. While most banks offer this service, calling ahead can be helpful if you have a significant amount of damaged currency or unusual damage, to confirm their policies. Banks routinely handle these exchanges and forward unfit currency to the Federal Reserve for removal from circulation.

Submitting Mutilated Currency Claims

Severely damaged currency, classified as “mutilated,” requires submission to the Bureau of Engraving and Printing (BEP). Mutilated currency includes notes so badly damaged that less than half remains, or their condition makes their value uncertain, often due to fire, water, chemicals, or other extreme events. The BEP offers this redemption service free of charge.

To initiate a claim, gather the damaged currency and prepare documentation.

Required Documentation and Packaging

A letter detailing the estimated value, how the damage occurred, and your contact information.
Your bank account and routing number for direct deposit, particularly for amounts of $500 or more.
Complete and include BEP Form 5283, the official request form for examination of mutilated currency.
Package the currency carefully to prevent further deterioration, ideally in the condition it was found, avoiding any attempts to tape or alter it.
Remove any coins, as they should be sent to the U.S. Mint, not the BEP.

Mail the package containing the currency, letter, and form to the BEP’s Mutilated Currency Division. For U.S. Postal Service shipments, use a specific P.O. Box; private carriers require a street address. Processing time can range from six months to three years, depending on the complexity of the case and the BEP’s workload. You can inquire about the status via email or phone. Redemption may be denied if the damage appears intentional, is part of a criminal scheme, involves misrepresentation, or if fragments are unidentifiable.