Banks will usually accept ripped bills if more than half of the bill remains intact
If you bring a torn $20 bill to your bank, the teller will typically take it without argument. Banks handle damaged currency regularly and have processes in place to deal with it. The key threshold is whether more than half of the original bill is present — if it is, your bank can deposit it or exchange it for a new one on the spot.
The reason banks accept damaged bills is that they can send them to the Federal Reserve, which has a whole division called the Bureau of Engraving and Printing that handles mutilated currency. The Federal Reserve doesn't charge banks for this service, so there's no cost passed to you. Your bank simply processes the damaged bill through its normal deposit or exchange workflow.
If less than half the bill remains — or if the bill is so damaged that its value cannot be determined — the situation changes. In those cases, your bank will likely refuse the bill and may direct you to contact the Federal Reserve's Mutilated Currency Division directly. This is a slower process and requires you to submit the damaged bill with documentation about what happened to it.
Key Takeaways
- Banks accept ripped bills if more than half of the bill is present and can exchange or deposit them immediately.
- The Federal Reserve's Bureau of Engraving and Printing processes damaged currency at no cost to you or your bank.
- Bills with less than half remaining or bills too damaged to identify may require you to contact the Federal Reserve directly.
- Damage from water, fire, or normal wear is handled the same way — the threshold is always whether enough of the bill remains to verify its value.
How to exchange a ripped bill at your bank
Walk into your bank with the damaged bill and ask to speak with a teller. You don't need an account — most banks will exchange damaged currency for anyone. Hand over the bill and explain what happened to it. The teller will examine it to confirm that more than half is present and that the bill's denomination can be identified.
If the bill passes inspection, the teller will give you a replacement bill of the same value immediately. No paperwork, no waiting period. Some banks may ask you to fill out a simple form for their records, but this takes less than a minute. The entire transaction usually takes under five minutes.
If your bank refuses the bill, ask whether they can send it to the Federal Reserve on your behalf. Many banks will do this as a courtesy, though they may ask you to wait a few days for the replacement. If your bank declines, you can contact the Federal Reserve's Mutilated Currency Division yourself — they have a mailing address and an online submission process.
When the Federal Reserve handles it directly
If your bill is severely damaged — burned, waterlogged, or torn into multiple pieces — you may need to work with the Federal Reserve instead of your bank. The Mutilated Currency Division accepts submissions by mail. You'll need to send the damaged bill along with a letter explaining what happened to it and how much money you believe it represents.
The Federal Reserve's address for mutilated currency submissions is on their website under "Currency Services." The process takes several weeks. The Federal Reserve will examine your submission, verify the denomination and value, and mail you a replacement bill or a check. You don't need to prove you owned the bill — the Federal Reserve simply replaces it based on what remains.
There is no fee for this service. The Federal Reserve does not charge individuals or banks for mutilated currency replacement. This is a public service funded through the Federal Reserve's operating budget.
Damage that banks will and won't accept
Banks accept bills damaged by everyday wear: creases, small tears, fading, and stains. They also accept bills damaged by accidents: water damage from a washing machine, minor fire damage, or damage from being sat on or bent. The standard is simple — if more than half the bill is there and you can identify what it is, a bank teller will take it.
Banks will refuse bills that are counterfeit, obviously altered, or so damaged that the denomination cannot be determined. They will also refuse bills where less than half remains, even if you can see it was a $100 bill. In those cases, the Federal Reserve is your only option, and even then, replacement is not may provide if the remaining portion is too small to verify.
Intentionally destroyed bills — bills that have been deliberately cut, burned, or shredded — fall into a gray area. If you bring in a bill you deliberately damaged, a bank may refuse it on principle, though technically the Federal Reserve would still replace it if enough remains. The Federal Reserve doesn't investigate intent; they simply verify what's left.
What happens to the damaged bill after you turn it in
When your bank takes a damaged bill from you, it doesn't go back into circulation. The teller sets it aside and includes it in the bank's daily deposit to the Federal Reserve. The Federal Reserve then examines it, confirms its value, and destroys it. The bill is shredded and disposed of — it never returns to the money supply.
This is why banks can replace it immediately without waiting for Federal Reserve confirmation. The bank knows the Federal Reserve will accept it, so they give you a new bill right away and absorb the damaged one into their normal processing. The Federal Reserve reimburses the bank through the banking system's settlement process, though this happens behind the scenes and you never see it.
Damaged bills and your bank account
If you deposit a damaged bill into your bank account rather than exchanging it for cash, the process is the same. The teller will accept it, credit your account, and send it to the Federal Reserve. You get the money immediately — there's no hold or waiting period because the bank trusts the Federal Reserve to accept it.
Some banks may ask you to sign a form stating that you're depositing a damaged bill, but this is just for their records. It doesn't affect your account or create any liability for you. The bank is simply documenting that they processed a damaged bill through your deposit.
Frequently Asked Questions
Can I exchange a ripped bill if I don't have a bank account?
Yes. Most banks will exchange damaged currency for anyone, account holder or not. Walk in with the bill, ask a teller, and they'll replace it if more than half is present. Some banks may ask for identification, but they won't require an account.
What if my bill is ripped into two pieces?
If you have both pieces and together they make up more than half the bill, your bank will accept them. Bring both pieces to the teller and explain what happened. The bank will tape them together if needed and process them as one damaged bill.
How long does it take the Federal Reserve to replace a severely damaged bill?
If you mail it directly to the Mutilated Currency Division, expect four to six weeks. The Federal Reserve examines each submission individually, so timing varies. If your bank sends it on your behalf, add another week or two because it goes through the bank first.
Will a bank replace a bill that's been through the washing machine?
Yes, as long as more than half of it remains and you can identify the denomination. Water damage is one of the most common reasons bills come in damaged. Bring it to your bank and they'll exchange it immediately.
What if I lost half my bill and only have one piece?
If less than half remains, your bank will refuse it. You can contact the Federal Reserve's Mutilated Currency Division directly, but they may not replace it if they cannot verify the original value from what's left. The more of the bill that's missing, the less likely replacement becomes.