Yes, banks will exchange damaged money for you
If you have bills or coins that are torn, stained, faded, or otherwise damaged, your bank will exchange them for new currency at no cost. You do not need to be a customer of that bank — any bank will do this. The process is straightforward: bring the damaged money to a teller, explain what happened, and they will give you replacement bills or coins of the same value.
The bank does not keep the damaged money. Instead, they send it to a regional Federal Reserve office, which inspects it and either returns it to circulation or destroys it depending on its condition. Your role ends when you hand it over.
Key Takeaways
- Any bank will exchange damaged currency for new bills or coins at full value, whether you have an account there or not.
- Bring the damaged money to a teller and ask for an exchange — no paperwork or explanation is required.
- The Federal Reserve inspects damaged currency banks send in and decides whether to reissue or destroy it.
- Severely damaged money (less than half remaining, or completely illegible) may take longer to process, but you will still receive its full value.
What counts as damaged money
Damaged currency includes bills that are torn, ripped, stained with ink or other substances, faded so the image is hard to see, water-damaged, burned, or creased so severely that parts are missing. Coins can be bent, corroded, or worn smooth. A bill with a small tear or a coin with minor scratches is still usable, but if it bothers you or you worry it will not be accepted elsewhere, a bank will exchange it.
Money that has been deliberately defaced — written on, marked, or altered — is still exchangeable. The bank's job is not to judge why it is damaged, only to confirm it is real currency and exchange it.
How to exchange damaged money at your bank
Walk into any bank branch during business hours and go to a teller. Tell them you have damaged currency you would like to exchange. Hand over the bills or coins. The teller will count them, confirm the total value, and give you new currency of the same denomination and amount. This usually takes a few minutes.
You do not need an account at that bank, and you do not need to call ahead. Some branches may ask you to fill out a straightforward form if the amount is very large or the damage is severe, but this is rare. Most exchanges happen without any paperwork at all.
What happens to the damaged money after you hand it over
The bank collects damaged currency from all its branches and sends it to one of twelve regional Federal Reserve Banks across the country. The Federal Reserve has a Currency Examination Team that inspects each piece. If the bill or coin is real and the damage is not too severe, it goes back into circulation. If it is too damaged to be safely used — for example, if less than half of the bill remains or it is illegible — the Federal Reserve destroys it.
This process protects the money supply by removing currency that might jam machines or confuse people. It also catches counterfeit money before it spreads. You will never see your specific damaged bills again, but you will have received their full value in exchange.
Severely damaged money and longer processing times
If your damaged money is in very poor condition — burned, heavily water-damaged, or missing large sections — the teller may not be able to exchange it on the spot. Instead, they will send it to the Federal Reserve for inspection. This can take two to four weeks. During that time, you will not have the money, so the bank may ask you to leave contact information so they can reach you when the Federal Reserve makes a decision.
Even in these cases, you will receive the full value of the currency if the Federal Reserve confirms it is real. The delay is only to verify the amount and condition. If you need the money urgently, ask the teller whether they can exchange it when ready based on what they can see, or whether it must go to the Federal Reserve.
Money that is not damaged but just old or unusual
Coins and bills that are straightforward old, rare, or no longer in common circulation are still legal tender and can be exchanged at any bank. A $2 bill, a coin from decades ago, or currency printed in a different year all have full value. Banks exchange these the same way they exchange damaged money — no questions asked.
If you think you have a rare or valuable coin or bill, you may want to have it appraised by a coin dealer or numismatist before exchanging it at a bank, because its collector value might be higher than its face value. But if you straightforward want to use it as money, any bank will take it.
What if the bank refuses to exchange your money
This is uncommon, but if a teller says they cannot exchange your damaged currency, ask to speak to a manager. Banks are required to exchange damaged U.S. currency. If the local branch still refuses, try a different bank branch or contact the Federal Reserve directly. The Federal Reserve's Currency Examination Team can inspect severely damaged money and send you replacement currency by mail if no local bank will help.
To contact the Federal Reserve about damaged currency, search online for "Federal Reserve damaged currency" and your region. Each of the twelve regional Federal Reserve Banks has a process for handling currency that banks cannot process locally.
Frequently Asked Questions
Do I have to be a customer at the bank to exchange damaged money?
No. Any bank will exchange damaged currency for anyone, regardless of whether you have an account there. Walk in during business hours, go to a teller, and ask for an exchange.
Will the bank give me the same bills back or new ones?
You will receive new currency. The damaged bills or coins you hand over go to the Federal Reserve for inspection and are not returned to you. You get replacement currency of the same total value.
What if my money is counterfeit?
If the teller suspects the currency is counterfeit, they will not exchange it and may contact law enforcement. Counterfeit money cannot be exchanged. If you received counterfeit currency, report it to the U.S. Secret Service or your local police.
Can I exchange foreign currency that is damaged?
No. Banks exchange damaged U.S. currency only. Foreign money must be exchanged at a currency exchange service or a bank that offers foreign exchange, and they typically will not take damaged bills. Check with your bank about whether they offer foreign exchange services.
How much damaged money can I exchange at once?
There is no legal limit. You can exchange $10 or $10,000 in damaged currency. Very large amounts may require the teller to send it to the Federal Reserve for inspection, which takes longer, but you will still receive full value.