Firstly, rarity of a banknote means there is a very limited quantity on the market. Many people think that rarity means very old but this belief has no ground; there are many banknotes that are very old but at the same time very common and available in a very wide range.

A good example of a rare banknote is the Egyptian one Pound note of King Farouk; it is rarer and therefore more valuable than the previous issue P22. Moreover, the recent Egyptian 20 Pound note is much rarer and has a higher value than the previous 20 Pound note (Pick 48) due to its signature. Also, the recent Egyptian 20 Pound note with signature of Mohamed Abd-El-Fattah(15) P52a is the rarest note of this denomination. There are so many examples of rare notes that are not necessarily old.

Secondly, grading describes the condition of the note. Banknotes have many grades including (best to worst) UNC, AU, XF, VF, F, VG, G, and P. For more details, please see Inspection and Grading.

In banknote appraisal, we must also consider this point: How rare is a particular note in a certain grade? For example, Egypt P25 (5 pounds of King Farouk) is not hard to find in lower grades but is very difficult to find as UNC.

There are other factors that may play a role in the note's value; these include need and demand. If a note is well sought after, its value will be greater than a note which attracts little attention.

The appraisal of a banknote is of great value to collectors as well as non-collectors. To collectors, it renders their collection a real investment. They will refer to an appraisal when they decide to sell, buy or swap. Appraisal can be very important to non-collectors if they inherit a collection. So, without a shadow of a doubt banknote appraisal is an important tool to all collectors and/or owners of a collection.

Some catalogues have certain values for notes but we do not think such prices are fair; often these catalogues either over price or under price their items. You may also watch online and physical auctions to determine the value of a note, but be careful—may people tend to use these auctions as a sort of gambling. In time and through experience your banknote dealings will give you a good sense of how to properly appraise your notes.