Towels that were either never very good, or that have frayed so much at the ends they're trailing threads, get replaced. They're used as rags, or for gun cleaning, when they get really gross. Sometimes, they just get claimed for other causes. One nice but oddly colored towel we got as a wedding present got claimed by my cat. He just became very attached to it, and it didn't match anything, so I folded it up and put it in his bed. This is my second post in a row about him and towels, oddly enough.