Paper Money Grading: PMG & Standards

Why Paper Money Grading Matters

Grading paper money follows the same fundamental principle as coin grading — establishing a standardized language for describing condition that facilitates buying, selling, and valuing notes. However, paper money grading evaluates different physical characteristics than coin grading. Where coins are assessed primarily on wear, paper money grading focuses on folds, handling marks, stains, tears, and paper quality — the types of degradation that affect flat paper objects rather than metal discs.

Third-party grading by PMG (Paper Money Guaranty) or PCGS Currency has become increasingly important in the paper money market, providing authentication, standardized grades, and protective encapsulation that preserves notes for future generations. Understanding the grading scale helps you evaluate notes at coin shows, set realistic expectations for your purchases, and price your notes accurately for sale.

The Paper Money Grading Scale

Paper money uses a 70-point numerical scale similar to the Sheldon scale for coins, but the grade criteria are specific to paper currency:

1–3 (Poor to About Good): Heavy damage — holes, missing pieces, heavy staining, severe tape damage. The note is identifiable but barely intact.
4–6 (Good): Very heavily circulated with many folds, possible tears, significant soiling. All design elements readable but overall appearance is rough.
8–12 (Very Good): Heavy circulation wear with multiple folds, moderate soiling, possible small tears. Margins may be uneven or slightly trimmed.
15–20 (Fine to Choice Fine): Moderate circulation with clear evidence of folding (typically 5–7 folds visible), light soiling, and some softening of paper crispness. A "Fine" note is the most commonly encountered grade for older notes.
25–30 (Very Fine to Choice VF): Light to moderate circulation. Several folds visible but paper retains some crispness. Colors remain bright. This is the sweet spot for many collectors — attractive appearance at reasonable prices.
35–40 (Extremely Fine to Choice XF): Very light circulation. One to three light folds visible, with paper still crisp and colors bright. An XF note looks great in a holder and represents excellent quality without the premium of uncirculated grades.
45 (Choice Extremely Fine): One or two very light folds with no other evidence of handling. Paper is crisp and original.
50–53 (About Uncirculated): No folds but may show light counting marks, a light center bend, or minor handling evidence. Very close to uncirculated quality.
55–58 (Choice to Superb AU): Near-perfect with perhaps one almost imperceptible fold or counting crease.
60–63 (Uncirculated): No folds or bends. May show minor handling marks, slight unevenness, or staining. The note was never circulated but isn't pristine.
64–66 (Choice to Gem Uncirculated): No folds, excellent paper quality, bright colors, well-centered margins. Outstanding eye appeal.
67–70 (Superb to Perfect Gem): The highest grades, reserved for notes with exceptional paper quality, perfect centering, bright colors, and no visible handling marks whatsoever. PMG 70 is essentially theoretical for vintage notes.

PMG vs. PCGS Currency

PMG (Paper Money Guaranty) is the dominant grading service for paper money, grading significantly more notes than its competitor. PMG is affiliated with NGC (coins) and operates under the same parent company. PMG notes are encapsulated in a clear holder with the grade, description, and any special designations printed on a label.

PCGS Currency (formerly PCGS Banknote) is PCGS's paper money grading division. While smaller than PMG in market share, PCGS Currency is growing and offers competitive grading with the backing of the PCGS brand. PCGS Currency holders are similar in format to PMG holders.

For most collectors and dealers, PMG-graded notes have broader market acceptance and higher liquidity. However, both services provide reliable authentication and grading that protects buyers and sellers.

Special PMG Designations

PMG applies several special designations that affect value:

EPQ (Exceptional Paper Quality): Indicates the note's paper has not been physically, chemically, or materially processed to give it the appearance of a higher grade. EPQ is the paper money equivalent of "original surfaces" on a coin — it confirms the note hasn't been pressed, washed, bleached, or otherwise treated. EPQ notes command 20–50% premiums over non-EPQ notes at the same grade.
Star (★) designation: Exceptional eye appeal within the assigned grade — similar to NGC's star designation for coins.
Fancy Serial Number: PMG notes fancy serial number patterns on the label when applicable.

Evaluating Paper Money at Shows

When examining banknotes at coin shows:

Hold to the light: Transmitted light reveals folds, repairs, and thin spots that aren't visible under normal lighting.
Check margins: Even margins on all four sides indicate good centering. Trimmed notes (cut to appear more centered) are worth less.
Look for repairs: Tape, glue, and professional paper repairs may not be obvious without careful examination. Hold the note at an angle to detect surface irregularities.
Assess paper quality: Original, crisp paper feels different from washed or pressed paper. Experienced collectors develop a tactile sense for paper originality.
Check for staining: Rust spots, foxing (brown spots from fungal growth), ink stains, and water damage all affect grade and value.

For notes valued above $100, PMG certification provides essential protection against restoration and alterations that may be undetectable to non-experts. Established paper money dealers can guide you through the grading process and help you understand the subtle differences between grades that justify price differences.