DEFINITION of Worn Currency

Worn currency refers to currency notes that are torn, damaged or badly soiled. Banks separate such currency notes daily from the amounts that they collect from the public and exchange them for crisp new bills at a U.S. Federal Reserve Bank.


Banks send unneeded currency to one of 28 Federal Reserve offices around the country. There the cash is sorted and checked for counterfeits. The Fed also assesses whether bills are still usable or should be retired from circulation. Currency that is no longer usable is no longer legal tender. If it is no longer usable, it is removed from circulation and shredded. Some shredded bills are put in bags and sold as souvenirs to Fed visitors, but most are recycled. Once the Fed has reviewed the notes and replaced the worn currency with fresh new bills, it returns the cash to the bank.