What is a circulated bill?

A circulated bill is a currency note or banknote that has been in general circulation and has been used to make payments. It has typically been passed from person to person or between entities, and has accumulated some wear and tear as a result. Circulated bills may have folds, creases, smudges, or other signs of handling. They are still considered legal tender, as long as they meet certain criteria, such as not being torn, mutilated, or excessively damaged.