What Happens to Old U.S. Paper Currency?

June 5, 2013 | By More
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Fed Reserve Bank Chicago Shred MoneyA couple of weeks ago I had to stop by the Teller window to get some cash for the weekend.  I filled out a withdrawal slip and handed it over to the Teller.  Since this lady and I know each, we chatted for a few minutes about what I was planning to do.  A trip downtown with lunch by the Lake Front was on the docket.  It was going to be one of those rare days in Chicago that promised perfect weather.  As she pulled out the money from her drawer and began to count out ten…twenty…thirty… she stopped, put aside a crinkly, faded $10 bill and then proceeded with her counting.  Now, since I’ve known this particular Teller for years, I know she prefers to give customers newer bills.  I figured that soft $10 bill was not going to see the light of day any time soon.  It was paper currency that was likely ready to be pulled from circulation.

Do you know what happens to old U.S. paper currency?  After all, there comes a time when a $1, $5, or even a $100 bill finally gives out.  Before I tell you the fate of old money, here are a couple of facts about U.S. paper currency you might find interesting. (1)

●  Paper currency is produced at the U.S. Bureau of Engraving and Printing in Washington D.C. and Fort Worth, Texas. (2)

●  Paper currency is made out of 75 percent cotton and 25 percent linen. (3)

●  You can double fold a bill 4,000 times before it rips. (4)

●  The largest denominations last the longest because they don’t pass through the hands of consumers as often.  A $100 bill will last over 21 years while the $1 bill will be ready for the shred bin in less than 5 years. (5)

So, what happens to soft, crinkly, faded paper currency here in the United States?  It’s not that it’s no longer any good.  Quite to the contrary – it is still valuable.  As a result, old paper money is not just tossed in the trash but shredded.  Since it is the Board of Governors of the Federal Reserve System who is the issuing authority for Federal Reserve notes [paper currency] in the United States, it is this entity that oversees paper currency destruction. (6)

Some of you may remember from a previous Post – there are 12 Federal Reserve Bank offices in different areas around the United States.  One of these offices is located in the heart of downtown Chicago.  It’s the Federal Reserve Bank of Chicago.   As an example, let’s look at a couple of facts about the shredding of paper currency that occurs at the Chicago location. (7)

●  The Federal Reserve Bank of Chicago shreds around $10 million of currency every day! (8)

●  The Federal Reserve Bank of Chicago has a Money Museum and tours are available to the public.  Over 40,000 people visit the Money Museum annually. You can learn first-hand from the tour guide the goings on at the place where millions of dollars are shredded every day.  (9)

●  Visitors to the Money Museum receive a souvenir.  It’s a little bag of shredded money that totals $364!  (The website has a short video announcing this fact).

So, now you know what happens to old paper currency.  The next time you handle a faded, crinkled dollar bill, you’ll know what the end game will be for that piece of paper.

Homework:

Read Where Money Goes to Die by Lauren Covello at FoxBusiness.com.   It provides a nice overview of today’s conversation.

Also, if you are ever planning to visit Chicago, add a visit to the Federal Reserve Bank of Chicago and check out the Money Museum.  To find out more about a visit, go to their website.

Endnotes & Resources for Post:

(1)  Fox Business.com:   “Where Money Goes to Die,” by Lauren Covello, May 3, 2013

(2)  U.S. Bureau Engraving and Printing/U.S. Department of Treasury

(3)  Fox Business.com:   “Where Money Goes to Die,” by Lauren Covello, May 3, 2013

(4)  Ibid.

(5)  Chicago Tribune:  “All that cash – under glass,” by Leslie Mann, April 18, 2012

(6)  Federal Reserve Bank Services 

(7)  Federal Reserve Education 

(8)  Chicago Tribune:  “All that cash – under glass,” by Leslie Mann, April 18, 2012

(9)  Ibid.

Federal Reserve Bank of Chicago 

*Royalty-free photo provided through the Federal Reserve Bank of Chicago website at www.chicagofed.org/webpages/utilities/newsroom/photos.cfm.

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Category: Banking, General, New to Banking

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