Do you wonder where old money goes? Have you noticed how a bank often gives out clean and crisp banknotes? But when you get change at a restaurant, you’ll often get wrinkled bills?
Many people do not know that almost every day, the nation refreshes its supply of currency. That’s because paper money rips, crinkles, disintegrates, gets soiled and mangled. Mutilated money is often the result of any of these common causes:
- Chemicals like explosives
- Animal/insect/rodent damage
- Deterioration by burying
It is up to the Federal Reserve to put new money into circulation and take old money out
But the Fed doesn’t actually make new money. The two agenc
ies that create new money in the U.S. are:
- Bureau of Engraving (BEP)
- United States Mint
There are strict rules that govern how these agencies create new coins and currency. Other rules exist to define what makes money too unfit for use. Unfit money can’t go through an ATM or another electronic reader.
So, every day, the Federal Reserve puts new currency into circulation. And, takes the damaged money out. Some reports say that over 90 % of the notes that the BEP delivers each year is to replace money deemed unfit.
DOES THE FED RECYCLE MONEY?
When a note is authentic but too worn for recirculation, the Fed destroys it. In the past, it would burn or shred old bills, dumping them in landfills. In fact, prior to 2010, it only recycled about a third of shredded cash.
But this process is changing. Going green, you could say. Take San Francisco, for instance. There, the Federal Reserve Bank partners with a green facility. They burn shredded currency in an eco-friendly power generation plant. The plant then provides electricity for local businesses and homes.
CAN YOU TAKE RIPPED MONEY TO THE BANK?
Some banks accept and exchange soiled, dirty, worn and torn bills. But they set rules about what they take and what they don’t. These rules may follow BEP guidelines for mutilated currency:
- The note is more than 50 % identifiable as United States currency
- Has enough remnants of security features (like serial numbers)
- More than half the original note remains
The Treasury also has a method in place to review claims made where you can’t check the above off your list. To file a claim, you need to submit the currency and details of how it became mutilated.
HERE’S WHAT HAPPENS TO OLD CURRENCY
Here are some other some surprising facts about recycled money that you may not know:
- Banks send excess currency to one of 28 Fed cash offices all around the country, in armored vehicles under tight security.
- The Fed runs the cash through special sorting machines to count it, check for counterfeits, and cull the bills considered unfit.
- The Federal Reserve rejects incorrect denominations, suspected counterfeits, and non-machine-readable notes.
- Every year the Treasury Department handles about 30,000 claims for mutilated money. It redeems mutilated currency valued at over $30 million.
- In one year alone, the Federal Reserve shredded 7,000 tons of retired money.
WHAT IS CONSIDERED UNFIT?
- A bill with holes totaling more than 19 square millimeters, or the size of an aspirin
- Dirty and worn out bills detected with sensors
- Fives, tens and twenty-dollar bills printed before 1996
- More than 90% of the new currency the Fed orders each year is used to replace old currency that has been destroyed
- For fiscal year 2019, the greatest number of bills that the Federal Reserve ordered were $1 bills, at 2,502,400,000
- The Federal Reserve placed an order of about 7 billion notes from the BOE for fiscal year 2019
HOW LONG SHOULD NOTES LAST?
According to the Federal Reserve the lifespan of notes varies by denomination. It will also depend on how many times each one passes between users. Smaller bills tend to change hands more often, so it doesn’t endure as long as the larger bills (like the $100).
|Estimated Lifespan (*)
WHAT HAPPENS TO THE OLD NOTES?
- Each year the Money Museum gives away approximately $36.4 million in shredded money as souvenirs
- The rest used to end up in landfills or burned; these days the Fed recycles nearly 90% of the money destroyed
- After the money goes through the shredder, the briquetting machine compresses everything and spits out what looks like a big pellet
- The pellet is around two inches in diameter by five inches long
- This reduces the volume of waste by a 9-to-1 ratio and significantly reduces landfill dependency
- They no longer burn the money as the inks used in the printing process may be harmful to the environment
- Horse breeders tried to use it as bedding but the chemicals in the old money caused skin rashes on the horses
- Shredded cash now ends up as mulch, compost, potting soil, fuel pellets, and even insulation for homeowners
- Millions of dollars pass through the banks each day – The NY Fed destroys around $5 million notes each business day
- Atlanta has that beat with an average of $6 million a day
- Topping the list, the Chicago Fed and the Detroit Branch shred about $26 million each day!