Mutilated Currency: What is it? How to Replace?

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If you regularly use cash currency, you might’ve left some bills in your attic, misplaced your wallet and it accidentally caught fire, shredded the bills with some trash paper, got hit by a flood, or maybe even your dog ate them.

In most of these cases, not all hope is lost. If you can recover even small parts of this mutilated currency, you’ll probably be able to redeem it.

What is Considered as a Mutilated Currency?

Money, especially note bills, could easily be damaged in many ways, while we’re using them during our daily lives or due to misplacing them or storing them in inadequate conditions.

The damage to the currency could vary from simply being dirty or defaced to being almost completely torn or destroyed and being mostly unrecognizable. Depending on the level of damage, you can determine if you can still use the currency or whether you should replace it and where to redeem it for new bills.

In the US, bills replacement and redemption are regulated by the Federal Reserve Banks and the US Department of the Treasury. These currency redemption procedures are quite a frequent occurrence. In fact, the Treasury Department reportings show that it redeems mutilated currency worth over $30 million every year, handling more than 30,000 claims along the way.

Due to this large number of claims, the cases are handled specifically by the Treasury Department’s Bureau of Engraving and Printing (BEP) at the mutilated currency division, which offers the mutilated currency redemption service.

Not all damaged bills are considered as mutilated. Thus, you shouldn’t try to replace any defaced or soiled currency through the redemption service. Some bills could easily be replaced at a bank if the damage is not severe enough to be considered as mutilated.

According to the BEP, the mutilated currency is a currency that has sustained severe damage to the extent that its security features like the color-shifting ink, security thread, 3D ribbon or the portrait watermarks are missing or its value is questionable and requires special examination by experts at the BEP to be identified. A note with 50% or less of it remaining is also considered as mutilated.

The currency could be mutilated due to different causes. The BEP states that the most common causes are fire, water, explosives, and chemicals; damage by animals, insects or rodents; and deterioration due to being buried in the soil.

On the other hand, the BEP considers currency that is damaged but not mutilated as any notes that are dirty, defaced, badly soiled, torn, limp, worn out or even disintegrated, yet more than one half of the note still remains and its value is identifiable without the need for any special examinations by experts. You can simply exchange these damaged bills at your local bank.

How to Replace Your Mutilated Currency?

If you have some note bills that are considered as mutilated, you can exchange them for full value through the BEP’s mutilated currency redemption service after being examined and confirmed as eligible to be redeemed.

The Treasury Department’s regulations state that mutilated currency can be redeemed at face value if:

  • More than 50% of the note is present and is identifiable as US currency. In addition, a sufficient part of the security features must be clearly visible.
  • 50% or less of the note remains and it should be identified as US currency. In this case, it’s important that the method of mutilation be known and there’s supporting evidence to ensure that the missing portions of the note have been completely destroyed, to the satisfaction of the Treasury. A clear example of this is a note that has been mostly burnt with less than one half of it only remaining.

In the 50% or less case, the reason for the need for satisfactory supporting evidence of the destruction of the missing parts is to prevent fraud claims by people who would rip their notes in half and try to redeem both halves, thus exchanging the same note twice.

In order to have your mutilated currency replaced, you need to have a mutilated currency claim submitted to the BEP. The currency in question could be delivered by mail or in person.

Along with the mutilated currency, you should include a letter that details the estimated value of the submitted currency and an explanation of the reason it became mutilated. It should also include info such as your contact info and the reimbursement info whether it’s a bank account number or a mailing address in case of a check reimbursement.

The submission package should be carefully handled to prevent further damage to the currency. The BEP gives the following tips and recommendations on the procedure:

  • First, ensure that the currency is in fact mutilated by carefully assessing the damage. You could measure the bill to see how much of it remains intact and check for security features.
  • Try not to disturb the note’s fragments any more than they already are.
  • Brittle currency should be packed in plastic or cotton and placed in a secure container.
  • The currency that was mutilated in a box or purse or any other container should be left in it to prevent any further damage. The container should be sent with the currency even if the fragments were removed from it, along with any other contents that could contain fragments of the notes.
  • Leave the currency as it is and do not try to alter it in any way. If it was flat, don’t try to roll, fold, tape or glue any parts of it. On the other hand, if you find it in a roll, don’t try to straighten it out.
  • Remove any metal that’s mixed with the currency, as it could severely break up the notes if packaged together. Don’t send any coins with the paper currency as well. Mutilated coins are handled by a different department, the US Mint.
  • In cases of contamination and health hazards, you should write the word “Contaminated” on all the internal packaging and describe the contamination in your letter.

Due to the high volume of claims, the BEP states that it could take between six to 36 months to process your claim, depending on the condition of the currency and the complexity of the examination process.

It’s also worth noting that the Director of the BEP has the final authority for the settlement of the claims.

Mutilated Coins

As we stated earlier, mutilated coins are processed by the US Mint. These are partial coins or coins that are bent, fused, melted, twisted out of shape or defaced. They still must be identified as US currency and are redeemed for their metal value, not their face value.

Wrap Up

As long as your mutilated currency is still recognizable, you’re almost sure to redeem it for its full value. However, it could prove to be a lengthy and dreadful process to go through.

That’s why you should try to take care of your paper bills and keep them intact. It’s advisable not to have much cash and rely more on electronic payment instead.

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Hi, I'm GP. A personal finance expert with a mission to help Entirely Money readers break free of money worries. Combining a finance-focused education background (B.S. in Finance and MBA with Finance focus) with over 15 years of personal and corporate finance experience to help you achieve your financial best life!