Thu, 23 Aug, 2018
Damaged money: Can you still use torn banknotes to buy things?
We're sure the situation seems familiar. You forgot to take your cash out of your pockets before throwing it in the wash, and out comes damaged notes. Or maybe, you ended up receiving a torn bill in change.
The question is, is it worth anything? According to the Reserve Bank of Australia (RBA), it depends on how badly it’s damaged.
In 1988, Australia phased out paper notes and replaced them with hi-tech plastic bills made from polymer. But while they are tougher, they aren’t completely foolproof with around $2 billion worth of "unfit" money getting disposed of each year.
The RBA receives money that has been ripped, graffitied or have slowly worn out with time, but what happens if you have one in your wallet?
If it’s less than 20 per cent missing, you’ll be paid the full value when you take it into your local bank. If the damage is more than 20 per cent but less than 80 per cent, then a value is paid in proportion to what remains.
For example, if a quarter of a $20 note has been damaged then you’ll get $15 when you hand it in. But if more than 80 per cent is missing, then you’ll receive nothing in return.
“These banknotes may not be worth full value because the Reserve Bank needs to take into account the possibility that pieces of the banknote may be presented for value separately,” said the RBA.
When it comes to notes that are “unfit”, the RBA encourages banks to send it directly to them, as they want it taken out of circulation.
“A banknote that has become worn or sustained minor damage is classified as unfit,” it says.
“Even though these banknotes can continue to be used, to maintain the high quality of banknotes in circulation, the Reserve Bank has asked (banks and other deposit points) to remove any unfit banknotes from circulation.”
Notes that are vandalised with graffiti, have signs of heat damage, tears or worn ink are considered to be unfit.
And it’s not to ensure that the notes look good, but more to prevent counterfeiting as good quality money makes the fakes easier to spot.
If you have money that fits the description above, head to your bank, otherwise, you can get in touch with the RBA for assistance.