What Are Star Notes?
Perhaps you have noticed the little star that sometimes appears by the serial number on U.S. paper money. The star tells us that the note is a replacement note.
If money is damaged during the printing process, the imperfect bills are replaced with star notes, which are exactly like the notes they replace, but have a numbering system of their own and a star in place of one of the serial letters.
On Federal Reserve Notes, a green star appears at the end of the serial number. On United States Notes, a red star appears at the beginning of the serial number.
In the US, the Bureau of Engraving and Printing inspects currency for printing errors prior to releasing notes into general circulation. When notes are discovered that have been printed incorrectly (such as having the serial numbers upside down, etc.) the misprinted “error notes” are replaced with star notes because no two bills within a certain series can be produced with the same serial number.
They are used to maintain a correct count of notes in a serial number run. By their nature, star notes are scarce than notes with standard serial numbers and as such are widely collected by numismatists. Some of the highest prices paid for modern (post-1928) U.S. banknotes have been for star notes.
A star note was also substituted for the last note in a block rather than printing a note with a serial number consisting of eight zeros.
This practice is no longer in use, as the highest range of serial numbers is now reserved for uncut sheets sold to collectors, so regular notes intended for circulation do not reach the final serial number in the block.