Why Is The 2-Dollar Bill So Rare?

Why is the 2-dollar bill so rare? The seldom-seen $2 bill often raises eyebrows when used in transactions. If you’ve wondered why you rarely come across this unusual banknote, you’re not alone.

If you’re short on time, here’s a quick answer: The 2-dollar bill is rare mostly because people tend to hold onto them instead of spending them or depositing them at banks. This reduces their circulation.

In this comprehensive guide, we’ll explore the history of the $2 bill, the reasons for its scarcity compared to other denominations, why people tend to keep it, and what the future looks like for America’s oddball currency.

The Origins and History of the $2 Bill

When the $2 bill was first introduced

The $2 bill made its debut in March 1862 during the Civil War as a way for the federal government to alleviate a currency shortage. The large-sized note featured a portrait of the first U.S. Secretary of the Treasury, Alexander Hamilton, and was initially backed by bonds before transitioning to gold backing in 1879.

While the public took to the convenient, pocket-sized banknotes, the $2 note, which was almost as large as today’s currency sheets, failed to catch on in everyday commerce and was last printed in 1966.

Why the $2 bill was discontinued at times

The $2 note started falling out of popular use in the late 1800s when the Treasury issued more convenient small-sized silver certificates. Sporadic printings occurred in the early 20th century, but production stopped entirely in 1966 as mint officials focused on more widely used denominations.

While legally valid for transactions, most businesses weren’t requesting the bills from banks, so they faded from circulation. Officials also deemed the note unnecessary with several $1 banknotes available.

However, in 1976, the Treasury resumed printings to commemorate the country’s bicentennial and then commenced regular production runs a few years later.

Revivals and current printing status

Today, $2 notes account for less than 1% of U.S. paper money production, with around 1-2 billion bills entering circulation over the past two decades. Most are commemorative issues highlighting historical events and incorporate advanced security features like color-shifting optical elements to thwart counterfeiting.

Despite their limited numbers, Series 2013 $2 notes are still being printed for circulation, mainly upon request by banking customers and businesses. While you likely won’t encounter many in everyday cash transactions, their novelty makes these little twin portraits of Thomas Jefferson highly collectible.

For more historical information on past $2 bill designs and issuances, the U.S. Department of the Treasury has a detailed timeline available. And while largely unseen for almost 50 years, it seems the iconic currency note retains an allure today as millions of new $2 bills enter wallets and cash drawers annually.

Why Most People Rarely See $2 Bills in Circulation

The tendency for people to save rather than spend them

Many people tend to hold onto their $2 bills instead of spending them. According to the U.S. Treasury, around 1.2 billion $2 bills are in circulation, but they are not seen frequently because a large number are being saved rather than used for purchases.

Some save $2 bills as novelty items or gifts. The $2 bill has an appeal as an unusual denomination. Others set them aside to give to their children or grandchildren. There seems to be a widespread tendency for $2 bills to be tucked away in drawers, wallets, and safety deposit boxes rather than flowing readily through the financial system.

Not being recirculated by banks and businesses

Banks often remove $2 bills from deposits and do not recirculate them as readily as $1 bills or coins. Many retailers also set aside any $2 bills they receive rather than using them to provide change for customers.

According to the Federal Reserve, only 318 million of the $2 bills in circulation are deemed ‘fit’ for circulation. Banks and stores essentially act as exit points for $2 bills, further reducing public encounters with these notes.

Low overall demand compared to other denominations

The $2 bill represents a very small share of overall U.S. currency. As of 2022, $2 bills made up just 0.004% of the total value of banknotes in circulation, while $1 bills accounted for around 45%.

The $2 denomination has lacked widespread use almost since its introduction in the 1860s, apart from certain periods. By comparison, $1 and $20 bills have remained highly popular. The relative lack of day-to-day demand for $2 bills doubtlessly contributes to their scarcity.

Who Still Uses the $2 Bill?

Despite its scarcity in general circulation, the $2 bill remains popular among certain niche demographic groups and industries. Additionally, it is heavily utilized for transactions in selected geographical areas across the United States.

Some enterprises also actively distribute the banknote, attempting to set themselves apart from competitors.

Popular with certain niche groups and industries

The $2 bill appeals to particular consumer groups like the elderly, whose members collect, trade, or spend the unusual currency. Numismatists, or coin and currency collectors, also covet scarce $2 bills printed decades ago.

Additionally, seasonal ventures centered around holidays or tourist locations rely heavily on the denomination.

Used heavily in some geographic areas

Although rare nationwide, businesses, banks, and individuals in certain U.S. regions still utilize the $2 bill regularly. For example, in metropolitan centers with historically large Irish-American populations like Boston and Pittsburgh, residents strongly associate the note with St. Patrick’s Day.

The Chicago Cubs baseball team boosts local circulation by selling $2 bills with the Wrigley Field image at games.

Offered by some businesses trying to stand out

A few novelty-oriented companies distribute the $2 bill to patrons in efforts toward product differentiation. According to Federal Reserve data, over 11 million $2 bills enter banknote circulation yearly.

Experts estimate substantial percentages derive from these distinctive businesses hoping to increase brand awareness and sales.

Future Outlook and Collectability

Unlikely to be discontinued given the collector demand

Despite its lack of circulation, the $2 bill continues to be printed due to ongoing demand from collectors and no plans to discontinue it. The BEP prints around 10 million new $2 bills each year, mainly to satisfy collector demand rather than general commerce.

And this demand is unlikely to dissipate anytime soon.

In fact, some experts predict collector interest in the $2 bill will only increase over time, ensuring its production continues. This is evident from sites like eBay, where many old and special edition $2 bills sell for well above face value.

Possibilities for increased circulation

While nationwide circulation is still extremely low, there have been local campaigns to increase usage and awareness of the $2 bill, such as in Baltimore and Colorado. Should these community-driven efforts gain more traction, it could compel the Federal Reserve to issue more $2 bills for general commerce.

There has also been legislation proposed to mandate wider circulation. In 2020, the To Require the Circulation of $2 Federal Reserve Notes bill was introduced to require the Board of Governors of the Federal Reserve System to issue $2 notes into circulation. However, it failed to become law.

Continued popularity with collectors

Rarity has contributed to the $2 bill’s popularity among collectors and numismatists. Some collectors specifically seek out radar serial numbers, miscut or misprinted notes, or circulation rarities.

This enthusiasm from collectors and dealers ensures the $2 banknote will likely maintain steady production levels to meet ongoing demand, even if nationwide circulation remains low for everyday transactions.

Why Is The 2-Dollar Bill So Rare – Conclusion

In the end, the $2 bill remains a uniquely American curiosity. While we can expect its circulation to remain relatively low compared to other denominations, its collectability and niche popularity seem likely to keep it in print for the foreseeable future.

So next time you get a $2 bill in change, feel free to spend it if you want. But you may also want to tuck it away as a cool piece of currency history first.