What Is Legal Tender?
Legal tender is money that, by law, a creditor cannot generally refuse when a debt is settled.
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In this lesson you learn to
- Define legal tender and name its key word, debt
- Tell legal tender from other ways to pay
- Compare the US, UK and euro area
- Apply the UK coin limits to a worked example
Check yourself: sample questions
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1.What is legal tender?
Legal tender is money that, by law, a creditor cannot generally refuse when a debt is settled. The key word is debt.
2.True or false: cards, bank transfers and cheques are legal tender.
False. They are ways to pay, but they are not legal tender.
3.Is there a US federal law that obliges private shops to accept cash?
No federal law obliges private businesses to accept cash in the US; some states and cities have their own rules.
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Sources (4)
- Board of Governors of the Federal Reserve System: FAQ 'Is it legal for a business in the United States to refuse cash as a form of payment?'
- The Royal Mint: Legal Tender Guidelines
- Court of Justice of the European Union: Press Release No 8/21, Judgment in Joined Cases C-422/19 and C-423/19, Dietrich and Haering v Hessischer Rundfunk (26.1.2021)
- Eigene Ableitung/Berechnung
Education only. Not financial advice.