Unfit currency is paper money that is worn, torn, dirty, limp, or defaced but still clearly identifiable as genuine, and you exchange it at face value by taking it to a commercial bank. Federal regulations at 31 CFR Part 100 define the category and direct holders to banks rather than the Treasury for the swap.1eCFR. 31 CFR Part 100 – Exchange of Paper Currency and Coin
What Counts as an Unfit Bill
Under 31 CFR Part 100, a note is unfit when it is no longer suitable for circulation because it is torn, dirty, limp, worn, or defaced.1eCFR. 31 CFR Part 100 – Exchange of Paper Currency and Coin The Federal Reserve translates that language into specific measurements its high-speed sorters apply to every note that passes through a Reserve Bank.
A note fails on surface quality when its soil level drops below a denomination-specific brightness threshold, when 25% or more of its printed ink has worn away, or when graffiti or staining covers 40 or more square millimeters on either side.2Federal Reserve Financial Services. Fitness Guidelines for Federal Reserve Notes Failing any single measurement is enough.
Physical defects have their own thresholds. A bill is unfit if it has any of the following:
- Holes totaling more than 15 square millimeters, including open tears on the short edges
- Tears deeper than 3 millimeters along the long edges
- A missing corner larger than 72 square millimeters
- A folded corner larger than 182 square millimeters, or four folded corners of any size
- Tape longer than 9 millimeters
- Length under 151 millimeters or width under 63 millimeters, with more than half the note still present
These thresholds come from the Federal Reserve’s Operating Circular No. 2 and apply uniformly across all Reserve Banks.2Federal Reserve Financial Services. Fitness Guidelines for Federal Reserve Notes In everyday terms: if the bill looks rough but you can read the denomination, see the security features, and hold most of it in one piece, it is unfit rather than destroyed.
Where To Exchange an Unfit Bill
Take it to a commercial bank. Federal regulations direct holders of unfit currency to banks rather than the Treasury, and a bank will redeem the note at face value as long as more than half of the original bill remains and its security features are sufficient to confirm it is genuine.3eCFR. 31 CFR 100.5 – Mutilated Paper Currency1eCFR. 31 CFR Part 100 – Exchange of Paper Currency and Coin
No federal regulation requires a bank to exchange unfit currency for someone who is not a customer, so your experience at a branch where you have no account may vary. Your own bank is the most reliable option. From there, the deposited note enters the normal cash cycle and eventually reaches a Reserve Bank sorter, which pulls it and sends it for destruction.
When a Bill Is Too Damaged for a Bank
The “more than half” rule is the dividing line. If half or less of the note remains, or if the damage prevents standard identification of security features, the bill is legally classified as mutilated rather than unfit, and a commercial bank cannot process it.3eCFR. 31 CFR 100.5 – Mutilated Paper Currency Fire damage, water damage that fuses notes into a solid block, chemical decomposition, and rodent damage typically fall on the mutilated side.
Mutilated notes go by mail to the Bureau of Engraving and Printing’s Mutilated Currency Division, which examines fragments forensically and pays out what it can verify.4Bureau of Engraving and Printing. Mutilated Currency Redemption That service is free, but processing runs on a first-in, first-out basis and some claims take well over a year.5Bureau of Engraving and Printing. How to Submit a Request for Mutilated Currency Examination If your bill is severely damaged, the bank counter is not the right path.
How Unfit Bills Get Pulled From Circulation
Commercial banks deposit currency with their regional Federal Reserve Bank as part of normal operations. Those deposits run through high-speed sorters that check every note against the fitness standards above. Bills that pass go back out to other banks; bills that fail are shredded and replaced with newly printed notes from the Bureau of Engraving and Printing.
Lower denominations wear out faster because they change hands more often. A $1 bill typically lasts around six years, while a $100 bill can circulate for 15 years or longer. The Federal Reserve orders new notes from the BEP each year in volumes designed to replace what the sorters destroy, keeping the total supply steady. So when you swap a limp twenty at the teller window, you are feeding it into a system built to catch it a step or two later and take it out of circulation for good.