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Yahoo Personal Finance

What to do with mutilated or damaged cash

Yahoo Personal Finance · Getty Images
Sarah C. Brady · Contributor

Do you have cash hidden in a closet, under your mattress, or even buried underground? If so, you might want to deposit it at a bank ASAP.

Keeping cash at home is risky. In addition to missing out on FDIC insurance and interest earnings, your money could be mutilated as the result of a hurricane or fire, or getting chewed on by hungry rodents.

If your cash is mutilated, you can sometimes redeem the value by acting quickly. Here’s what to do if you have damaged or mutilated currency.

What is mutilated currency?

The Federal Reserve defines mutilated currency as cash that's damaged in one or both of the following ways:

  • Only as much as one-half of the bill is remaining

  • The value is difficult to determine due to missing security features

If your cash fits this description, you can send it to the Bureau of Engraving and Printing (BEP) and try to get it redeemed. The BEP receives over 22,000 annual submissions of mutilated currency, totaling over $35 million in estimated value. That's around $1,591 average value per submission. In other words, there's a chance they'll redeem some or all of the bills you submit.

How does currency end up mutilated? The most common causes are exposure to the elements (water, fire, insects, rodents), deterioration from being buried, or exposure to chemicals.

What happens to cash that has been torn or damaged?

Surprisingly, cash that's torn, limp, or severely soiled is not considered "mutilated" as long as more than half of the bill is still intact. Instead, bills in this condition are considered "damaged" and can potentially be exchanged at a bank.

Read more: Can you deposit cash at an ATM?

How to exchange mutilated or damaged currency

Whether or not you can exchange your currency depends on the type of currency and the type of damage. Here's what you can do in each situation.

Mutilated cash

The process of exchanging mutilated cash is not a swift one, and there's no guarantee the BEP will redeem the full amount of your claim. Here's what you can do to attempt successful redemption:

  1. Complete and sign Form 5283. Include your explanation and the estimated value.

  2. Carefully pack the currency according to the BEP's Packing Directions.

  3. Submit your form and currency to:

Bureau of Engraving and Printing

Mutilated Currency Division, Room 344A

14th and C Streets, SW

Washington, D.C. 20228

  1. Receive your case ID number by email from the BEP.

  2. The BEP will examine your claim and currency to determine if the bills can be exchanged. This process takes anywhere from six to 36 months.

  3. For redemption amounts under $500, you'll receive a check. Payments of $500 or more are sent via Electronic Funds Transfer (EFT).

The agency processes claims for free. However, it applies specific standards to determine the value and whether the money can be redeemed. For example, the BEP won't redeem cash that's been intentionally damaged or if there's evidence to imply the remainder of the bill is intact.

Note that if your currency was mutilated due to a natural disaster or other unfortunate incident, you'll need to send it to the BEP for examination. In the past, the BEP has given priority to claims resulting from hurricanes and floods if the applicant wrote "Hurricane" on the outside of their submission package.

Damaged cash

Cash that's dirty, defaced, limp, torn, or worn is considered unfit for circulation. About 85% of these bills can be redeemed. To redeem yours, visit a local bank or credit union.

Contaminated cash

Some cash is contaminated to the extent that it's not safe to handle. If your cash is contaminated in any of the following ways, you might be able to deposit it at a commercial bank:

  • Mold

  • Sewage

  • Animal waste

  • Blood

  • Chemicals or hazardous liquids

Damaged coins

In the past, the United States Mint exchanged damaged coins. However, this service is no longer available due to issues with volume, counterfeits, and other complications.

It's still legal to melt down dimes, quarters, half-dollar, and dollar coins. However, you might find it more convenient to give all damaged coins to a scrap metal dealer or recycling agency.

Read more: Where to exchange your coins for cash

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