Legal Tender notes, also known as United States Notes, are one of the most important and iconic categories of U.S. paper currency. These red seal notes served as official money for everyday use long before the modern Federal Reserve Notes we use today. In this guide, we’ll explore the full history of Legal Tender Notes, how to identify them, what determines their value, and what yours might be worth if you’re holding one.
The History of Legal Tender Notes
Legal Tender Notes were first issued in 1862 during the American Civil War. The U.S. government needed a way to fund the Union war effort, and it began issuing paper money that was not backed by gold or silver. These notes were declared by law to be “legal tender for all debts, public and private,” meaning they had to be accepted for payment even if not backed by precious metals.
This was a significant shift. Until that point, U.S. currency was generally backed by a physical commodity like gold or silver. The introduction of Legal Tender Notes marked the beginning of fiat currency in the U.S.—money declared to have value by the government but not redeemable in specie.
The early notes, sometimes referred to as “greenbacks,” were issued in large sizes and high denominations. These notes remained in circulation for decades, and over time, their designs evolved with different series and denominations. Eventually, Legal Tender Notes were phased out in favor of Federal Reserve Notes, but the red-seal Legal Tenders were still issued as late as 1966 and are technically still legal tender today.
Identifying a Legal Tender Note
To determine whether you have a Legal Tender Note, look for the following characteristics:
- The words “United States Note” printed on the bill
- A red Treasury seal (usually round or scalloped) and red serial numbers
- Older notes may have ornate designs, portraits, and vignettes
- Common denominations include $1, $2, $5, $10, $20, $50, $100, $500, $1000, $5000, and $10,000
Most Legal Tender Notes that collectors come across today are either small-size red seal notes from 1928 to 1966 or large-size notes from the 1860s to the 1920s.
Legal Tender Note Denominations and Series
Legal Tender Notes were printed in a wide variety of denominations and series. Some of the most notable include:
- 1869 “Rainbow Notes” – Colorful designs with ornate printing
- 1880 Series – Common in multiple denominations
- 1907 and 1917 $1 and $2 notes – Still frequently found in collections
- 1923 $1 and $10 notes – Large-size red seals with more modern design elements
- 1928 to 1966 Small-size $2 and $5 notes – Recognizable and often affordable for collectors
The denomination and year of issue can significantly affect a note’s value. Rarer denominations and early series are more sought after.
What Determines the Value of a Legal Tender Note?
There are four main factors that influence the value of a Legal Tender Note:
1. Condition (Grade)
Condition is one of the most important variables. Notes in heavily circulated condition (folds, tears, stains) are generally worth less than those in pristine, uncirculated condition. The same note can vary drastically in value depending on condition. For example, a $10 Legal Tender Note in rough shape might be worth $25, while the same note in gem uncirculated condition could be worth over $1,000.
2. Rarity (Series and Denomination)
Some series and denominations had very low print runs or were quickly removed from circulation. These tend to carry higher premiums. For example, large-size notes from the 1860s and 1870s, especially in high denominations like $500 or $1,000, are exceptionally rare.
3. Fancy Serial Numbers
Collectors pay a premium for notes with fancy or rare serial numbers. These include low serial numbers (like 00000003), repeating digits (77777777), radar notes (12211221), and star notes. A common note with a fancy serial number can be worth ten times more than one with a normal serial number.
4. Market Demand
Like all collectibles, paper money values are subject to market trends. When demand for Legal Tender Notes is high—such as during major auctions or when currency collecting is trending—prices rise. During economic downturns or periods of low interest, prices may drop temporarily.
Are Legal Tender Notes Still Legal to Use?
Yes. Legal Tender Notes are still considered legal tender by the U.S. government. However, using them at face value would be unwise. Most are worth more to collectors than their denomination. For example, spending a $5 red seal note from 1928 at the grocery store would mean giving away a collectible that might be worth $20 to $100 or more.
How to Find Out What Your Legal Tender Note Is Worth
If you’ve got a Legal Tender Note and want to know what it’s worth, the best thing you can do is get a proper appraisal. Here’s what we recommend:
- Take clear photos of both the front and back of the note
- Include any visible serial number, year, and seal type
- Submit your photos to a trusted currency dealer for evaluation
At Old Money Prices, we offer free, no-obligation appraisals. Simply send us a picture of your note and we’ll respond within 24 hours with an estimate and cash offer.
Contact us here to get started
Summary: Key Takeaways About Legal Tender Notes
- Legal Tender Notes were the first widely circulated U.S. paper money not backed by gold or silver
- They feature red seals and are still legal to use—but are worth more to collectors
- Value depends on condition, rarity, serial number, and market demand
- Some notes are worth $10–$50, while others can fetch thousands of dollars
Legal Tender Notes are more than just currency—they’re pieces of American financial history. Whether you’re holding a common $2 red seal or a rare 1869 Rainbow Note, there’s always a story behind it—and potential value too.
Have a Legal Tender Note you’d like to sell or get appraised?
We’d love to help you find out exactly what your note is worth.