Question from Freida: I recently found out that we used to have $1,000 bills in circulation in the United States.
Why don’t we use them now? The largest bill I’ve ever seen is the $100 bill.
It seems to me that $1,000 bills would be very useful when making large cash purchases like buying a car or a new home.
Rick’s answer: That’s a great question, Frieda. And the answers might surprise you (yes, there is more than one).
As you mentioned above, the U.S. did indeed use to have $1,000 bills in circulation.
In fact, we’ve even used larger bills than that in the past!
Truth be told, there was a time when the Federal Reserve issued $5,000, $10,000 and $100,000 bills as well (although not all of them were used by the general population).
Which brings us back to your question…
There are several reasons why the U.S. Government decided to stop circulating bills larger than the $100 bill:
1 – If a really large bill were to be counterfeited and successfully passed, an unsuspecting victim could potentially lose his/her entire life’s savings in a single fraudulent transaction.
And yes, that actually happened many times back in the day.
2 – Really large bills would make it a lot easier for criminals to engage in illegal activities.
For example, if a drug kingpin were to sell $1,000,000 worth of illegal drugs to a distributor it would be a lot easier for them to conceal and carry ten $100,000 bills than ten thousand $100 bills.
3 – It wasn’t cost-effective for the U.S. Treasury to print larger bills due to economy of scale.
Compared to the number of smaller bills, there were relatively few bills larger than $100 in circulation at any given time. That meant they only rarely needed to be printed, and in small numbers).
Since there’s a significant cost involved with printing bills of any specific denomination, it cost the government (and hence the taxpayers) a lot more money per bill to design and print those larger bills than the smaller ones we use today.
Bottom line: While I agree that larger bills could definitely come in handy at times, I believe the government made the right decision in pulling them out of circulation.
By the way, there are still some $1,000 bills out there because not all of the ones that were in circulation have been collected by the Feds.
If you happen to be lucky enough to find one it’ll actually be worth a lot more than its $1,000 face value (as long as it’s genuine, of course).
How much are real $1,000 bills actually worth these days? Watch the short video below to find out!
Note: As always, you can watch the video at full screen by clicking the “square” icon that will pop up in the lower-right corner of the video after it begins playing.