Old Currency: What Really Hapens in its Afterlife –
Have you ever looked in your wallet and found a really gross bill? You know the ones– they’re torn, worn, stained, heavily wrinkled, wadded up and just, for lack of a better word, gross? While such money still technically holds value there comes a time in every bill’s life when it has to be put out of its misery, so to speak. When currency gets old and gross, it is literally up to the Federal Reserve to take such money out of circulation so that fresh money has a place to breathe.
There Comes a Time When “Old Money” Has Got to Go
Why does old money have to be removed? Because on top of being gross, old money can also cause some problems. Have you ever tried to use a wrinkled dollar in a vending machine or ATM? What about handed a wadded and torn dollar to a cashier? In both cases, chances are your old, gross dollar was rejected and labeled “unfit currency.” While the value of the bill hasn’t changed, its usability has, which is why it needs to be removed from public use and circulation so that fresh, new money can be put in. In fact, The Federal Reserve refreshes the nation’s supply of currency every single day in order to do away with money that has gone past its golden years and allow fresh money into play. Of course, the Federal Reserve does have more criteria than “old and gross” as a reason to remove bills from circulation. To be considered “unfit,” a bill must:
- Have holes that total more than 19 square millimeters (that’s about the size of an aspirin)
- Be dirty and worn out – such bills are often sorted out with sensors
- Be a five, ten, or twenty dollar bill that was printed before 1996 (these are removed solely because of their age)
So now that you know why certain bills are pulled from circulation, are you wondering what happens to them in the “afterlife?” If so, we have the scoop on the when, where, and how of what happens to old currency when it’s removed from public use.
Going Towards the Light: What Really Happens to Old Money?
There comes a time when both bills and coins must be destroyed to fully be removed from public circulation. There are actually three types of “money destroyers” who handle the destruction of bills and coins. These are The Bureau of Engraving and Printing, The U.S. Mint, and The Federal Reserve. Each of these entities has their specific jobs in both the creation and destruction of money. As the “great regulator” of money, the Federal Reserve actively distributes currency to the nation through the Federal Reserve Bank Cash Offices after the currency has been received from the Bureau of Engraving and Printing. In fact, when a bank gives out a loan, money must be created by the reserve. Likewise, when a loan is repaid, money must be destroyed in order to maintain regulation amount.
The U.S. Bureau of Engraving and Printing is responsible for creating all the nation’s bills and the U.S. MInt creates all the coins, but they also destroy bills and coins too. When bills and coins are no longer fit for use, it is up to both banks and ordinary citizens to hand over their unfit currency to these three agencies. Once the currency is received, each of these agencies engages in an inspection of the authenticity of the currency and issues a Treasury Check to the bank or individual in return. Each year, the Treasury Department handles about 30,000 mutilated currency redemption claims. When a mutilated bill is turned in, it is most likely shredded and sent to a waste facility for proper disposal. In the same way, when money is destroyed, bills are most always shredded while coins are melted down or broken up until unusable. It should be noted that unless you have the authorization to destroy a bill or coin, doing so is illegal in America, as well as elsewhere depending on where you live.
When it comes time for the authorized Federal Reserve, U.S. Mint, and Bureau of Engraving and Printing to destroy money, each “destroyer” makes absolutely sure that the money need be destroyed. All bills are inspected to see if they are too old, too damaged, too wrinkled, or too torn to be used in society. Mutilated is truly an accurate word because the bills must be ruined beyond repair to be destroyed. Bills that are not yet at this level may be repaired, especially if they have some years left. In fact, The Federal Reserve makes this an important part of inspection criteria by giving each bill denomination a “lifespan.” They are as follows:
- – 3.7 years for $1 bills
- – 3.4 years for $5 bills
- – 3.4 years for $10 bills
- – 5.1 years for $20 bills
- – 8.9 years for $100 bills
Both human inspectors and technology-based inspectors are used to make sure that a bill should be destroyed. The Federal Reserve and Bank Cash Offices use a high-tech, high-speed bill sorting machine known as the Banknote Processing System 3000, or BPS 3000. The machine was created by German Firm Giesecke & Devrient and uses ultra sensitive sensors to check bills for both authenticity and defects. This handy system both ensures when bills are fit for circulation and when they are not, so two jobs are done in one fell swoop! Some defects the machine looks for are:
- – Limpness
- – Tears
- – Dog Ears
- – Graffiti
- – Gratuitous Dirt and Soiling
If a bill is found to be counterfeit, it is sent to the Secret Service for further inspection. If, however, the bill is totally authentic but also totally gross, the machine will shred it then and there.
Coins are often melted down when they become too dirty or damaged for use. We’ve all seen those very old pennies that are caked with thick green or black gunk. Not only are they gross to use, but at some point, they are no longer recognizable as a penny. In addition, some coins are clipped, defaced, or bent, making them unfit for public circulation and use. When the coins are melted, their alloys are then extracted and recycled.
What Happens to Destroyed Currency?
Once shredded, notes are then sent to landfills or else packaged as souvenirs for the public on Federal Reserve Bank Tours. If you’ve ever had a family member bring you a bag of shredded of money home from a trip to one of the Federal Reserve Banks, you no longer have to worry or bemoan the waste of money–that bill was unfit for use anyway!
Unfortunately, old bills cannot be recycled into new bills. To use old bills to make new ones would actually cause issues with the quality of the currency. Not only will recycled bills have stains, but they will likely still have traces of the wear and tear they experienced when they were in use. In fact, Fox Business quoted Doug Crane, the vice President of Crane & Co., in 2012 in saying that since paper currency is made from linen and cotton, recycling is not an option like it would be with regular paper due to spots from ink and other issues. Crane and Co. is the company that manufactures all U.S. currency paper.
So when old paper currency is destroyed, it is destroyed for good.
Your Money and the Afterlife
So there you have it: old money certainly does kick the bucket at some point and the Federal Reserve springs into action to ensure those notes and coins are destroyed and new money is created. It may seem like you come across more old bills than new ones, but rest assured that the Federal Reserve, The U.S. Mint, and the Bureau of Engraving and Printing are always working to put fresh money into circulation. To help them out, maybe next time you fish a crumpled, gross bill from your pocket, consider sending it over to your bank or the Reserve itself and watch the circle of currency life unfold.