All of this assumes that you cut away the part that's worn too much, leaving just the good part.
- Use old towels for padding to make footstools from those big popcorn tins. Cut circles to fit the top of the tin with a couple of inches to spare. Glue these onto the top of the lid and tie the edges down firmly, but leave it where you can open and close the lid easily. Cover the whole thing with material, leather or plastic.
- They make great pet bedding as they can be washed easily.
- Cut insoles from old towels to help keep your feet warm in boots or shoes. Make them several thicknesses and sew the edges together.
- Several towels, sewn together to make one larger piece, makes a lightweight filler for hand made quilts.
- Make houseslippers, using instructions for moccasins. There are good instructions on eHow - just use old towels instead of leather and a needle and thread or your sewing machine instead of lacing and lacing needle. (Skip the awl, too.) If you add an extra sole to the outside of the slipper, you can take it off when it becomes worn and replace it without having to make another pair.
- I used an old towel duct taped to the edge of my desk as a wrist rest for quite some time until I found a freebie one.
- Besides padding for potholders, make mats to set hot pots and pans on the same way.
- Hemmed terrycloth makes excellent dishcloths.
- On the same note, make washcloths from them. You can use a close zigzag stitch to edge them, or just make a narrow hem.
- Make a patchwork tablecloth, throw or robe from them.
- Cut a piece about the size of a washcloth and hem it, then dampen it with liquid fabric softener and throw in the dryer with your clothes. Use this instead of dryer sheets and you'll save money.
- Make a rice or wheat heat pad by sewing an old hand towel up three sides, filling it with wheat or rice and then sew the fourth side. Microwave to heat and use as you would a hot water bottle or electric heating pad. The texture of terrycloth makes it soothing, but if you like, you can cover it with another cloth to keep the terrycloth clean.
- Make a dust mitt to get around those odd corners and spaces. Draw around your hand on a piece of newspaper, adding a three to four inch cuff, then draw and cut the pattern about an inch to an inch and a half larger. Fold an old towel over, and using the newspaper pattern, cut both sides of the mitt at once. Hem the cuff end, then sew around the mitt.
I'm sure there are other frugal uses I haven't thought about. If you know of one, post it to one of the threads on the forums so others can benefit!