Among the most visually striking and collectible types of paper currency errors is the cutting error. This mistake occurs during the final phase of banknote production—specifically when the printed sheets are cut down into individual notes. While small margin variations are common and usually don’t add much value, severe miscuts that show parts of adjacent notes or drastically uneven borders can fetch high prices at auction.
Let’s break down what causes cutting errors, how to spot them, and why some collectors are paying hundreds of dollars for notes that technically should never have left the printing facility.
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| 1996 $100 Federal Reserve Note (San Francisco) graded PMG 66 Gem Uncirculated EPQ with Cutting Error. Click images to enlarge. | |
What Is a Cutting Error?
A cutting error occurs when the large sheets of printed banknotes are misaligned during the cutting process, which is the final step in creating individual notes. U.S. currency is printed in sheets—either 32 or 50 notes per sheet depending on the denomination and series—before being sliced into single notes and bundled for distribution.
If the cutting machinery is even slightly off, it can result in uneven borders. In minor cases, this leads to notes with irregular margins—something that grading companies like PMG or PCGS consider during evaluation. But when the cut is significantly out of position, a more dramatic error occurs: either part of another note is visible on the edge (known as an adjacent note error), or part of the printed design is sliced off.
In either case, for a note to be recognized as a true Cutting Error by professional graders, both sides of the note must show misalignment consistent with a sheet-wide mistake. In contrast, errors where only one side is affected could be post-production damage and are not collectible.
High-Grade Example: The 1996 $100 Federal Reserve Note
A textbook example of a dramatic cutting error is seen in a 1996 $100 Federal Reserve Note from the San Francisco district. This note was graded PMG 66 Gem Uncirculated EPQ and displays a striking vertical cutting error, where the right margin encroaches dramatically into what should be the adjacent note’s space. It was offered in a June 2022 Heritage Auctions sale, where high-grade miscuts like this typically attract strong collector interest.
When viewed closely, you’ll notice that the entire note is shifted slightly to the left, and the right-hand margin includes the edge of another note. Both the front and back are perfectly aligned in their misalignment—a critical indicator of an authentic printing mistake and not post-print damage.
Because it earned the “Exceptional Paper Quality” (EPQ) designation, collectors knew it had not been tampered with or mishandled, which helps bolster its legitimacy and auction value.
Entry-Level Find: The 2017A $5 Federal Reserve Note
Not all cutting errors fetch thousands of dollars. Some more accessible examples still attract strong prices relative to face value, especially when they occur on lower denominations like the $5 bill.
One such note is a 2017A $5 Federal Reserve Note from the Dallas district, which shows a clear horizontal cutting error. Graded PMG 63 Choice Uncirculated EPQ, it sold for $228 in a November 2021 Heritage Auctions sale—a strong return on what was originally just five dollars in cash.
This note’s top border is cut very close to the design, while the bottom edge includes blank margin space from what would have been the adjoining note on the sheet. Again, both sides show perfect registration in the miscut, confirming the error occurred during the cutting stage at the Bureau of Engraving and Printing.
Typically, in order to qualify for a Cutting Error, a small portion of the adjacent note must be visible or (when the error occurs at the edge of the sheet) a small portion of the note’s design must be cut off. This 2017A $5 Federal Reserve Note has a Cutting Error that affects its horizontal alignment. It realized $228 in a November 2021 Heritage sale.
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| 2017A $5 Federal Reserve Note (Dallas) graded PMG 63 Choice Uncirculated EPQ with Cutting Error. Click images to enlarge. | |
Why Cutting Errors Matter to Collectors
Cutting errors have become increasingly sought after for a few key reasons:
Visual Impact: They are easy to spot and explain to non-collectors, making them fun and accessible.
Authenticity: When graded by professional services like PMG or PCGS, they are easy to verify as genuine.
Rarity: Severe cutting errors should never make it past quality control, so examples that slip through are inherently scarce.
Unlike other error types—such as ink smears, offset transfers, or misaligned seals—cutting errors do not require expert-level diagnostics. Their appearance alone is usually enough to pique the interest of both novice collectors and advanced specialists.
Key Things to Look For
If you’re hunting for cutting errors in the wild or evaluating your own collection, here’s what to check:
Both Sides Must Be Affected: The misalignment should be present on both the front and back of the note.
Design Intrusion or Truncation: Look for either a sliver of an adjacent note or a portion of the main design being cut off.
Blank Margin Space: In edge-of-sheet miscuts, you might see unusually large blank margins on one side.
Sharp Corners and No Folds: High-grade cutting errors are more desirable, especially when they’re uncirculated.
Final Thoughts
Whether you’re a seasoned paper money enthusiast or just getting started, cutting errors offer a tangible, visual link to the production process—and to the human (or mechanical) mistakes that sneak through. From dramatic vertical miscuts on $100 notes to modest errors on everyday $5 bills, these mistakes turn ordinary currency into desirable collectibles.
So, the next time you’re flipping through a stack of bills, take a closer look at the margins. That tiny misalignment could be a hundred-dollar mistake—in your favor.
