In currency collection, there are two types of bills: circulated and uncirculated. To qualify as one or the other, a bill must meet very specific criteria. Those criteria help to determine its worth. One question bill collectors have is whether uncirculated or circulated bills are more valuable.
In almost every case, an uncirculated bill is more valuable than a circulated bill. The exception of a circulated bill being more valuable than an uncirculated bill is when it’s rare or has historical significance. These exceptions, however, prove the rule of uncirculated bills being more valuable.
Of course, when a circulated bill is worth more than an uncirculated bill, the difference in value can be significant. Ordinarily, though, an uncirculated bill is more attractive, desired, valuable, and in better shape. Below, we cover uncirculated and circulated bills and what drives value.
Circulated Versus Uncirculated – The Basics
Most people regard bill currency as all the same, each indistinguishable from the other. If one examines a bill, they might take note of the signatories on it or the date it was minted, but generally, as long as the bill helps buy stuff they want, all bills are the same. To a collector, it is a different story.
Just like there are uncirculated coins, there are uncirculated bills. The majority of bills, like coins, are in circulation. Uncirculated bills have a special status with collectors and some investors. There are several reasons for their special status.
What Are Uncirculated Bills?
As the name implies, uncirculated bills are bills that are withheld from circulation. There are several reasons a bill might be withheld from circulation. Those reasons include being part of a special run of bills reserved for collectors, post-printing damage, a printing mistake, or a stamping error.
Of all these reasons, a reserved print run for collectors is the most common. Most rare would be a printing mistake because of the quality assurance processes that are in place to verify that a print is exactly as planned.
Regardless of the reason that a bill is uncirculated, barring an external influence, it is more valuable to a collector than a bill that has been in circulation.
To qualify as uncirculated, a bill must never have been in circulation or intended to be in circulation, not be available to the public on the currency circulation schedule, and available for private purchase. For these reasons, a bill is considered uncirculated, even if compliance with those criteria is the result of an error.
Characteristics Of Uncirculated Bills
Everyone has gotten bills that are crisp and clean with no rips, folds, tears, stains or any other sign of wear and tear. The ink is vibrant, and the imagery is sharp. The fact it is being handed out, however, disqualifies it from being uncirculated, even if technically the person handing it out is the first person touching it.
Uncirculated bills meet all the criteria above but have one additional distinction, being that the bills were never intended for circulation. The only way an uncirculated bill could be circulated is either by mistake or if there was a currency crisis that demanded more currency than is currently held in reserves be put into the market.
Why Are Uncirculated Bills Popular?
That brings us to why uncirculated bills are worth more than their circulated counterparts. At the very base level, uncirculated bills, because they are not intended for circulation, are necessarily more unique and rare than bills that are in circulation or destined to be in circulation.
Other reasons uncirculated bills are popular with collectors include their aesthetic, their condition, or to fill out their investment portfolios. They’re also chosen for value reasons, as there’s a domino effect whereby if one person collects them, the value increases, so others start to collect them and thus increase the value more. There’s a long-term value increase with collecting these bills.
For all these reasons, a bill can be considered to be uncirculated and, thus, worth more than a circulated counterpart.
What Are Circulated Bills?
By contrast, circulated bills are pretty easy to define, with minimal exceptions. The criterion to qualify as a bill in circulation is straightforward. If a bill is involved in a transaction and it was used as currency, it is considered in circulation. There are, though, a few more specific criteria.
A bill in circulation is simply a bill that is currently being used as currency. That does not, however, mean that every transaction involves a bill in circulation. The bill must be available to the public-in-general.
For example, a collector might have an uncirculated bill that another collector wants, or a dealer might have an uncirculated bill for sale. Merely because another collector purchases the bill in question does not mean the uncirculated bill moves to circulated status. If that were true, then every bill would be considered circulated unless it was never involved in any transaction whatsoever.
A second criterion is that the bill is used as currency. This means in the above example, the uncirculated bill would be considered a product and not currency, and the bills used to pay for that uncirculated bill would be in circulation.
Uncirculated bills are, though, unused currency. They generally will cost more than the face value of the bill because they are collectible. Depending on the year, the asking amount can be quite a bit more than the face value of the bill.
A bill that is in circulation will have some wear and tear on it. It also will not have certified uncirculated status. Most circulated bills will have quite a bit of wear and tear.
For example, look at any bill you have that is not certified as uncirculated. It likely has grime or dirt on it and possibly is stained. It also is very likely it is frayed, ripped, or gouged. Any bill that has those types of wear and tear cannot be considered uncirculated.
Circulated vs Uncirculated Bills: Which Are Worth More?
Uncirculated are almost always worth more than circulated bills due to their increased rarity, the better condition of the bills, how they’re graded, and how collectible they are. The only exceptions include those with historical significance or printing errors of some kind.
Having established the criteria for both circulated and uncirculated bills, several factors weigh into the value of either. As a rule, the vast majority of uncirculated bills are worth more than their circulated counterparts. There are several reasons for this. The most basic is a certification by the US Mint that the bills are not in circulation. Other factors are outlined below.
Rarity is an important factor regarding the value of uncirculated currency. Uncirculated bills are always a minority portion of a print run. That means from the outset, uncirculated bills are rarer than the bills put into circulation. So, from the beginning, before any bills are actually put into circulation, the bills earmarked as uncirculated are worth more.
That principle also applies to currency in the past. If you have an uncirculated bill that is extremely old, there is a chance that in addition to its rarity as an uncirculated bill, it has enhanced value because of its age. If it also has historical significance, the value is even more.
As mentioned, not all uncirculated bills are equal. In terms of value determinations, uncirculated bills come in four types, including damaged bills, print errors, human errors, or those that are purposefully uncirculated for collection purposes.
To be a purposefully uncirculated bill is to be set aside and designated as uncirculated purely for collectors. These bills may be marked to indicate their status, but other than that, they are pristine. They have never been folded, and have no stains, wear, fading, tears, punctures, or fraying.
Damaged bills typically are bills that have been damaged during the process of moving them from the point of bursting margins on a sheet to being stacked. A set of bills may have been dropped or something may have spilled on them. Rarely, the bills might have been damaged by handling and review.
Print errors can be in registration, ink coverage, or centering. The result includes, but is not limited to smudged images, uncentered images, uneven ink coverage, uneven ink margins, bleeding of ink, or over-absorption of ink that leads to fading.
Human errors are the rarest type of bill mistake. These are errors made in setting up the imagery, choosing inks, information errors like wrong serial numbers, etc. Because of automation and quality assurance, these types of errors seldom happen. When they do, they are usually caught very quickly and the sheet(s) with errors on them are destroyed.
How Bills Are Graded
All bills that are potentially collectible are graded on the PMG Paper Money Grading Scale, which is a derivation of the Sheldon grading scale, the internationally recognized paper money grading scale. There are 11 numerical grades that apply to uncirculated bills. Those are:
60: This is a bill that may have variable tone issue with the paper, a small stain, or fading. There are no folds on a bill at this level. There might be handling markings.
61: This uncirculated note is poorly centered, and the margins may infringe on the design. There may also be counting marks, smudges, or handling marks. There are no folds in this bill.
62: There may be very minor handling issues with this uncirculated bill. It may also have corner tip issues and possibly margin infringement on the design. It will not have folds.
63: The centering on this bill will have issues. There may also be very minor handling issues, but this uncirculated bill will have no folds.
64: With this type of uncirculated bill, the centering is off, and some handling might be evident, but not obvious. There will be no folds in the bills that qualify at this grade level.
65: A bill that reaches sixty-five will have no issues in terms of quality, imagery, or margins but may have some minor distractions because of handling. The centering on this level bill must be above average.
66: A bill at this level might have barely noticeable handling marks. The centering on this bill is above average.
67: This level of uncirculated bill will have above-average margins and registration. Handling might be noticeable, but not obvious.
68: The margins and centering might be off on this bill, but evidence of handling is minor. Centering on this bill will be near perfect.
69: The margins and centering might be off on this type of bill, but it is barely noticeable. There are no visible signs of handling except to a highly trained eye. The corners are crisp.
70: This is the highest grade of the PMG scale. These notes are near-perfect. The centering, registration, and margins are positioned correctly. The ink is crisp. There is no evidence of handling up to 5x magnification, the paper qualifies as “Exceptional Paper Quality,” the corners are crisp, and all the margins look even.
Any bills under sixty are not considered to be uncirculated because of issues with their condition. Affecting that can be blunted corners, bleeding ink, ink saturation, smudges, stains, rips, tears, or gouges. Folds are also a deal killer, even if the bill is uncirculated.
If the bill in question has any of the issues on that list, it will not be given a grade higher than fifty-nine, in most cases. The only exception is slight handling issues, ink issues, or very slight corner blunting. Generally, for bills under a sixty rating, collectors will not consider those bills worth paying anything beyond face value.
Often overlooked in the question of uncirculated versus circulated bill value is the appeal had regarding collectability. Uncirculated bills are used in many different capacities as part of their collectability. For example, some people collect them and hold onto them because they help balance an investment portfolio and are easier to manage than coins.
Collectible bills are always a worthwhile investment but storing enough to make a difference in an investment portfolio can take up a lot of room. Bills are generally stored neatly and compactly.
Another reason uncirculated bills are preferred over circulated bills is that uncirculated currency almost always increases in value. It is in pristine condition and not subject to degradation because of handling by the public. An uncirculated bill is also rarer than its circulated counterpart, which in turn makes it more collectible and valuable.
Finally, there is the aesthetics of an uncirculated bill. It is presentable as is. A circulated bill, even a valuable rare bill, may have wear and tear that might be appealing. The uncirculated bill is always crisp with no key issues, folds, or handling markings. That just appeals to many collectors.
Are Uncirculated Bills Legal Tender?
Any official uncirculated bills are legal tender and can be spent the same way any other legal tender is spent. If you have uncirculated bills, however, you may want to consider a few things before you spend the currency.
Uncirculated tender is likely worth more than face value. A $2 bill with uncirculated status has a currency value of $2. It may, however, sell for more than $2 in the collectors market. At the very least, you should check the price of an uncirculated bill to see if it is worth more than if you spent it as currency.
Uncirculated tender loses its status when spent. As soon as you use uncirculated bills, the bill loses its uncirculated status. It is no longer worth anything more than face value unless it has value for some other reason (which means you probably do not want to use it.)
Its uncirculated status enhances additional value. A rare bill is worth face value plus whatever the collector’s market will pay for them. An uncirculated rare bill is worth the face value of the bill, plus what the collector market would pay for that rare bill, plus additional value due to its uncirculated status. Losing the uncirculated status can, in some cases, cost hundreds of dollars.
How To Tell If A Bill Is Uncirculated?
The easiest way to tell is to use an online serial number checker. There are multiple available online and checking a serial number usually costs nothing.
If you cannot do the online checker, you can visually inspect the bill or bills. While you cannot tell with absolute certainty if your bill is uncirculated using this method, you can make a reasonable assumption if the bill meets certain criteria.
An uncirculated bill will have four crisp and sharp corners, no folds, no bends, no wrinkles, no scrunched areas, no abrasions, superior centering, vibrant colors, and raised ink impressions.
Another indicator a bill is uncirculated is if you have more than one with sequential serial numbers. This is not always the case and often banks give out circulated bills with sequential serial numbers. If, however, you are looking at bills that are allegedly uncirculated, sequential serial numbers are another potential indicator of uncirculated status.
The Exceptions for Circulated Bills
However, as with any type of collectible item, there are exceptions. Some circulated bills will be more valuable than an uncirculated bill or at least be worth about the same. Here are a few of those exceptions.
Some bills that are in circulation are rarer than uncirculated bills, or, at least, their value is very similar. One example would be the US $1,000 bill. A $1,000 bill has been printed by the US government at various times and it is still, technically, considered legal tender. Just about all known $1,000 bills are in museums or owned by private collectors.
The US government stopped making high denomination bills like $500, $1,000, $5,000 and $10,000 bills in 1969. Some remained in circulation well into the 70s. Now, however, if one popped up on the open market, it would be exceptionally rare and worth a lot of money.
A $1,000 bill today would be worth at least $1,000 and depending on its condition, possibly much more. Circulated bills are usually more valuable in this case because uncirculated bills have been accounted for and in most cases, were destroyed per US federal government procedures.
Closely affiliated with the rareness of a specific paper currency is its historical significance. In some cases, being associated with an event or era adds more value than its circulation status. In a few cases, the currency that has historical significance is more valuable than the currency when it was legal tender. Confederate paper money is a good example.
During the US Civil War, Confederate currency started off nominally valuable and lost value as the South started and then continued to lose the war. At one point, shortly before the end of the war, a Confederate dollar was worth six cents in gold. After the Confederacy ceased to exist, all Confederate currency was worthless as money.
Today, however, because of its historical significance and relative rarity, a confederate “grey back” (called that in comparison to the US greenback that was put into circulation during the war as well) is significantly more valuable than it ever was as currency. Its state of circulation does not matter.
A Confederate $5 bill is worth about $50 today. During the height of the Confederacy, it was worth around thirty cents.
Another example of currency that has a value that has only increased with time is the Continental from the US War for Independence from Britain. Because of British counterfeiting specifically to devalue Continental currency, a $1 Continental was worth about one cent. Today, that same bill, if it is in decent shape, is worth over $100.
In these cases, the historical significance outweighs the value of the currency. If uncirculated Confederate dollars or Continentals existed, their value would be driven by their historical significance and then by their condition. Their circulation status would not matter.
The US U.S. Bureau of Engraving and Printing produces more than ten billion forms of paper currency annually. At that volume, maintained for decades, some errors are going to happen. Many, if not most, get caught. Some errors, however, get into circulation. Those can be worth a significant amount of money.
Errors generally happen because of printing or alignment mistakes. Occasionally, inferior ink will cause problems, such as when it bleeds or fades into the paper. Additionally, rarely, the currency mock-ups will be wrong, or a production run will create a mistake. In each of these cases, the chances are exceptionally good it will be caught, but not always.
If an error is caught, it and any other affected bills are pulled from production and destroyed. If an error is not caught and gets out into circulation, there is rarely an uncirculated version of the same error. Thus, an error that is in circulation is more than likely the only version of that error in existence.
Commemorative Issue Notes
Governments have, on occasion, issued commemorative versions of a bill or bills memorializing and celebrating specific events, milestones, and achievements. It has even issued a commemorative dollar bill celebrating “lucky 7’s.”
The US Mint has a series of commemorative themes. Each of the themes celebrates some aspect of American life the Mint wants to celebrate. The following are commemorative versions of paper currency issued by the United States Mint, broken down by category:
The Lucky Money Collection features artwork that celebrates Chinese symbolism, and numerology and places an emphasis on “8888,” “168,” and “777.” Included in this set are the Lucky 777 note, the $1 Fortune note, the $2 Panda note, the $1 Prosperity Forever 168 note, and the $1 Year of the Rat 2020 note.
Premium Products focuses on historical, educational and societal events, people, trends, hobbies, etc. These are perfect for beginners, history buffs, and collectors. This category includes the 2019 Youth Coin and Currency Set, America’s Founding Fathers 2020, $20 Color of Money Collection, Apollo 11 50th Anniversary Set, Happy Birthday Currency note 2020, $10 We the People Collection, Texas $2 Step 25th Anniversary Currency Set, $2 Rocketship, $5 Lincoln Freedom Collection, and $20 Designs in Motion.
Uncut Currency are available in sheets of $1, $2, $10, $20, $50 and $100 notes. These are perfect for framing. Some of the more popular sheets include a $1 25-note, a $20 16-note, a $100 four-note, a $50 eight-note, a $2 32-note, a $1 five-note, a $1 50-note, alongside other denominations and sheet totals.
Uncirculated bills are almost always more valuable than circulated bills due to their rarity, the condition of the bills, how they’re graded, and collectability. The only exceptions include mitigating factors that increase the value of a calculated bill such as historical significance or errors.