Yes, the Federal Reserve will replace damaged money, but the bank is not the one doing it
If your cash is torn, stained, faded, or otherwise damaged, you can exchange it for new bills. The U.S. Bureau of Engraving and Printing — the federal agency that makes currency — has a program called the Mutilated Currency Division that handles this. Your bank can start the process, but the actual replacement happens at the federal level, not at your local branch.
The bank's role is to collect your damaged bills and send them to the federal government on your behalf. Most banks do this at no charge, though some may ask you to fill out a form. The federal government then examines the bills to confirm they are genuine U.S. currency, and if they are, it sends you replacement bills in the mail.
The whole process usually takes four to twelve weeks, depending on how damaged the money is and how backed up the federal office is. If your damaged bills are part of an insurance claim or a legal matter, the timeline may be longer because the government may need additional documentation.
Key Takeaways
- Your bank can submit damaged money to the federal government's Mutilated Currency Division, which will replace it if the bills are genuine.
- You do not need to prove how the damage happened — the government replaces currency regardless of whether it was burned, water-damaged, chewed by pets, or worn out from use.
- The replacement process takes four to twelve weeks and happens by mail; you will not get new bills when ready at the bank counter.
- If more than half of a bill is missing or unidentifiable, the government may deny the claim, so keep all pieces of the damaged bill together.
How to start the replacement process at your bank
Walk into your bank with the damaged bills and tell a teller you want to exchange them for new currency. Do not try to spend damaged bills or deposit them into your account — tellers will refuse them, and the process becomes more complicated. Bring the bills in a clean envelope or small container so they do not fall apart further.
The teller will likely ask you to fill out a short form describing the damage. Some banks have their own internal form; others use the federal government's form (the Form 4000). Either way, the form is straightforward and asks only what happened to the money and how much you are submitting. You do not need to provide a reason or proof of how the damage occurred.
The bank then packages your bills and sends them to the nearest Federal Reserve Bank, which forwards them to the Mutilated Currency Division in Washington, D.C. You will receive a receipt or confirmation number. Write this down — you may need it if you want to check on the status of your claim.
What counts as damage the government will replace
The federal government replaces money that is burned, water-damaged, faded, torn, stained, moldy, or worn thin from circulation. It also replaces currency that has been chewed by animals, damaged in a fire, buried in soil, or exposed to chemicals. Basically, if the bill is still recognizable as U.S. currency and more than half of it remains, the government will likely replace it.
The key rule is that more than half of the bill must be present and identifiable. If you have only a small corner of a $20 bill, the government cannot replace it because there is not enough of the original bill to confirm its value. If you have most of the bill but a large section is missing, the government will examine it closely to see if the remaining portion is enough to identify the denomination and confirm it is genuine.
Damage from normal wear and tear — like a bill that is straightforward old and faded from being in circulation for years — is also replaceable. You do not need to have a dramatic story about how the money was damaged. A worn-out $5 bill is just as replaceable as one that survived a house fire.
What happens if the government denies your claim
The Mutilated Currency Division may deny a claim if the bills cannot be identified as genuine U.S. currency, if less than half of each bill is present, or if the bills are counterfeit. If your claim is denied, the government will send you a letter explaining why and will return your damaged bills to you (or to your bank, depending on how the claim was submitted).
If you believe the denial was a mistake — for example, if you think more than half of the bill is actually present — you can contact the Mutilated Currency Division directly to ask for a review. The division's mailing address and phone number are included in the denial letter. Be prepared to explain why you think the claim should be approved and to provide any additional information about the bills.
In rare cases, if the damage was caused by someone else's negligence or a business error, you may have a separate legal claim against that person or business. For example, if a bank teller accidentally ran your bills through a shredder, you might have a claim against the bank. This is separate from the federal currency replacement program.
Damaged money from specific situations
If your money was damaged in a house fire, flood, or other disaster, the process is the same: bring the bills to your bank and let them know what happened. The government does not require proof of the disaster, but if you are filing an insurance claim, your insurance company may ask for documentation (like photos or a police report) to support your claim that the damage occurred.
If your money was damaged by a pet, a child, or an accident at home, you still follow the same steps. The government replaces the currency regardless of how it was damaged. You do not need to explain that your dog chewed it or that you spilled coffee on it — just bring it to the bank.
If your damaged money is part of a legal dispute — for example, if you are in a lawsuit and the damaged bills are evidence — the process may take longer. The government may hold the bills while the legal matter is resolved, or it may require a court order before replacing them. Your lawyer can help you navigate this situation.
What to do if your bank will not help
Most banks will submit damaged currency to the federal government at no charge, but a few may refuse or charge a fee. If your bank declines to help, you can submit the damaged bills directly to the Mutilated Currency Division yourself. You will need to mail them to the address provided on the federal government's currency replacement page, along with a completed Form 4000 and a letter explaining the damage.
Mailing damaged currency through the postal service is allowed, but you should use registered mail or another tracked method so you have proof of delivery. Include a return address and a phone number so the government can contact you if it needs more information about your claim.
Submitting directly to the federal government takes longer than going through a bank — typically eight to sixteen weeks — because your package has to be processed as an individual claim rather than as part of a bank's batch submission. But it is an option if your bank will not cooperate.
Frequently Asked Questions
Can I get new money right away at the bank counter, or do I have to wait?
You have to wait. Banks do not keep replacement currency on hand for damaged bills. The bank sends your damaged bills to the federal government, which examines them and mails you new bills. This process takes four to twelve weeks. If you need cash when ready, you will have to use a different source of money.
What if I only have a small piece of a bill left?
If less than half of the bill is present, the government will likely deny your claim because there is not enough of the original bill to confirm its value and authenticity. If you have more than half, the government will examine it closely. Keep all pieces of a damaged bill together and bring them all to the bank.
Do I have to pay a fee to replace damaged money?
No. The federal government replaces damaged currency at no charge, and most banks submit the claims at no charge as well. If a bank charges you a fee, you can submit the claim directly to the Mutilated Currency Division yourself by mail.
What if the damaged money is from a long time ago or a bill that is no longer in circulation?
The government will still replace it, as long as it is genuine U.S. currency and more than half of the bill is present. This includes older bills, rare denominations, and bills that are no longer printed. The government keeps replacing old currency indefinitely.
Can I replace money that is just worn out from normal use?
Yes. Faded, thin, or worn bills from regular circulation are replaceable. You do not need dramatic damage like a fire or flood. If a bill is too worn to use comfortably, your bank can submit it for replacement.