What are the different types of legal tenders? (with photos)

Front and back of an American cent.

Legal tender is a term that officially refers to specific payment options that are offered – or offered – to service a debt and that must be accepted by the creditor. In the United States, as established by the Coinage Act of 1965 in Section 31 USC 5103, the coins, bills and bills that make up US currency are defined as legal tender. The term currency not only includes the accounts most familiar with images of early presidents, but also rarely encountered types of currency such as Federal Reserve Notes and United States bills. Foreign money in the form of currency or coins is not considered legal tender in the US. Therefore, common forms of legally valid currency familiar to most US citizens include banknotes and coins.

The $100 bills include a watermark to distinguish legal tender from counterfeit bills.

Although national law sets out the specific definition of legal tender, there is no federal law that expressly requires a company, organization or lender to accept any type of legal tender commonly found. Organizations that only accept currency as payment are much less common today than they were a few decades ago. In fact, most modern debt payments use checks, money orders, credit cards, and debit cards in place of legal tender for payment documentation and convenience. Even the most recent changes to our payment methods, such as electronic funds transfer (EFT) or paying through companies that started out as major online retailers, are now common ways to pay off debt. In fact, US government tax refund, retirement and disability checks will soon be available only via an EFT deposit.

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The two dollar bill is a rare denomination of American currency.

Other common trade restrictions hamper the notion of a legal tender that must be accepted or cannot be refused. The most common example cited involves buses refusing payment except in currency or retail establishments refusing to accept currency above a certain amount, such as convenience stores refusing to accept currency bills over $20.00 ( USD). Whether these policies are established as a matter of convenience, ease of business, concerns about counterfeit bills, or security concerns, they have been repeatedly upheld by the courts when questioned.

Although currency usage is declining, paper money still has an attraction that the digits on a computer screen or credit card payment bill lack. Commonly found paper money includes $1.00, $5.00, $10.00, and $20.00 (USD) bills. $50.00 (USD) is rarely found but fondly remembered. The highest denomination of the coin that remains in circulation is the $100.00 (USD) bill. Higher denomination notes are in the hands of collectors or are withdrawn and destroyed when they are returned to the Treasury system.

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