Banks will usually accept ripped money, but the condition and the amount of damage matter
If a bill is torn, stained, or otherwise damaged, your bank will take it—but they may not hand you a replacement on the spot. Instead, they send it to the Federal Reserve, which examines it and decides whether it qualifies for replacement under the Mutilated Currency Division program. If the bill passes inspection, you get new currency. If it doesn't, you get nothing back.
The key question is how much of the bill is still there. The Federal Reserve has a specific rule: if you can see more than half of the original bill, it counts as a bill. If you have less than half, it does not, and the bank will not accept it. This is not a judgment call—it is a measurable threshold.
Most everyday damage—a torn corner, a coffee stain, a crease—does not prevent a bank from taking the money. The bill still circulates. But if the damage is severe enough that the bill becomes unfit for circulation, the bank can refuse it at the counter, or they can accept it and send it in for examination.
Key Takeaways
- A bill must have more than half of its original surface intact for a bank to accept it; less than half and it has no value.
- Banks can refuse visibly damaged bills at the counter, but most will accept them and send them to the Federal Reserve for inspection.
- The Federal Reserve's Mutilated Currency Division examines bills and issues replacements if the damage does not prevent identification.
- Replacement can take weeks or months because the bills travel to a Federal Reserve facility and are processed in batches.
- If a bill is damaged by fire, water, or deliberate mutilation, the Federal Reserve still evaluates it under the same half-bill rule.
What counts as damage the Federal Reserve will accept
The Federal Reserve does not require a bill to be pristine. Wear and tear from circulation is normal, and bills with folds, small tears, or discoloration still pass through the system every day. A bill with a small rip on one edge, or a stain that does not obscure the security features, will be accepted by your bank and will likely be deemed fit for continued circulation.
The critical factor is whether the bill can still be identified. The Federal Reserve needs to confirm the denomination and verify that it is genuine. If the serial number is visible, the color-shifting ink is intact, or the watermark can be seen, the bill has a strong chance of being accepted. Damage that obscures these features—or that removes more than half the bill—is what triggers rejection.
Water damage, mold, or staining from exposure does not automatically disqualify a bill. Many bills survive floods or are recovered from damaged wallets. The Federal Reserve examines each one individually. If enough of the bill remains to confirm its value and authenticity, it will be replaced.
How the replacement process works at your bank
When you bring damaged currency to your bank, the teller will examine it. If it is only slightly damaged—a small tear, minor staining—they may straightforward accept it as regular currency and put it back into circulation. You walk out with nothing to report.
If the damage is more obvious, the teller will likely ask you to fill out a form. This is not an process in the formal sense; it is a receipt that documents what you are turning in. You will need to describe the damage and how it occurred. The bank then sends the bill to the nearest Federal Reserve facility, usually within a week or two.
At the Federal Reserve, a trained examiner looks at the bill under magnification. They check whether more than half is present, whether the security features are visible, and whether the bill is genuine. This process can take two to four weeks. If the bill passes, the Federal Reserve issues a replacement, which your bank receives and deposits into your account or gives you in cash.
If the bill fails—because less than half remains, or because it cannot be authenticated—the Federal Reserve notifies your bank, and you receive no replacement. Your bank will tell you the outcome, usually by mail.
Damage that will likely get rejected
A bill with less than half of its surface remaining will be rejected. This is not subjective. If you have a fragment that is clearly smaller than the other half, the Federal Reserve will not replace it. The same applies if the bill is so badly burned, dissolved, or decomposed that identification is impossible.
Deliberate mutilation—cutting a bill in half, writing over the serial numbers, or gluing pieces of different bills together—also triggers rejection. The Federal Reserve can tell the difference between accidental damage and intentional destruction, and they treat them differently. Intentional mutilation may also trigger a report to the U.S. Secret Service, though prosecution is rare unless the damage was done to defraud someone.
Bills that have been chemically treated, bleached, or altered to change their appearance will be rejected and flagged. If you have a bill that has been deliberately altered, do not bring it to a bank. The bank is required to report it.
What to do if your bank refuses the bill at the counter
If a teller refuses to accept a damaged bill, you have options. You can ask to speak to a manager, who may have different judgment about whether the bill is worth sending in. You can also contact the Federal Reserve directly. The Federal Reserve's Mutilated Currency Division accepts mail-in submissions from individuals, not just from banks.
To submit directly to the Federal Reserve, you will need to send the bill to the Federal Reserve facility that serves your region. You can find the address on the Federal Reserve's website. Include a letter describing the damage and how it occurred. The Federal Reserve will examine it and send you a replacement if it qualifies, or a letter explaining why it does not.
This process takes longer than going through a bank—usually four to eight weeks—because the mail adds time on both ends. But it is an option if your bank will not cooperate.
Damage from specific causes: fire, water, and age
Fire-damaged bills are examined the same way as any other damaged currency. If more than half the bill remains and it can be identified, it will be replaced. Severely burned bills—reduced to ash or fragments smaller than a postage stamp—will not may have access to. Bills that are partially burned but still mostly intact usually pass inspection.
Water damage from flooding, washing, or submersion is common and usually does not prevent replacement. The Federal Reserve sees many bills recovered from basements, safes, and buried containers. As long as the bill is not so decomposed that it cannot be identified, it has a reasonable chance of being replaced. Mold, discoloration, and brittleness do not automatically disqualify it.
Old bills that are worn thin from decades of circulation are not the same as damaged bills. A bill that is still intact but faded or creased will continue to circulate. The Federal Reserve only replaces currency that has been damaged after it entered circulation, not currency that is straightforward old.
Why banks sometimes refuse damaged money
Banks refuse damaged bills for two reasons: they are not sure the bill will pass Federal Reserve inspection, or they do not want to handle the paperwork. A teller who sees a bill that is more than half destroyed will refuse it because there is no point in sending it in—it will be rejected anyway. A teller who sees a bill that is borderline might refuse it out of caution, even if it would probably pass.
Some banks also have internal policies that limit which damaged bills they will accept. A large bank might accept anything that is more than half intact; a small bank might be more conservative. This is the bank's choice, not a Federal Reserve rule.
If you believe your bank is being unreasonably strict, you can go to a different bank or submit directly to the Federal Reserve. You are not required to use your own bank for this process.
Frequently Asked Questions
What if I have a bill that is torn exactly in half?
If you have both halves and together they make up the complete bill, the Federal Reserve will replace it. If you have only one half, it does not may have access to because it is less than 50 percent of the original. You need more than half to get a replacement.
Can I tape a ripped bill back together and use it?
Yes, if the tape does not obscure the security features or serial numbers. A taped bill will circulate normally. However, if the damage is severe, a cashier or bank teller may refuse it. Taping does not change the Federal Reserve's assessment—if the bill qualifies for replacement, it qualifies whether taped or not.
How long does it take to get a replacement?
If you go through your bank, expect two to four weeks. If you mail directly to the Federal Reserve, expect four to eight weeks. The Federal Reserve processes batches of damaged currency, not individual submissions, so timing varies.
What if the Federal Reserve says my bill is counterfeit?
This is rare but possible. If the Federal Reserve determines the bill is not genuine, they will notify your bank, and you will receive no replacement. You will also be told that the bill is counterfeit. If you received it unknowingly, you have no recourse—counterfeit currency cannot be exchanged.
Do I need to report damaged money to the IRS?
No. Replacing damaged currency is not a taxable event. You are not receiving income; you are exchanging damaged currency for its equivalent value in good condition.