Security deposit interest calculator

Who owes interest, and at what rate

There is no federal deposit-interest rule. The obligation comes from a state statute or a city ordinance, and the rate is usually pinned to something that moves — a published index, a bank rate, or a figure the city republishes each year. That is why this page asks you for the rate rather than guessing it: a rate quoted from memory is a rate that was right two years ago.

Holding the deposit so the interest is provable

Where interest is owed, the account usually has to be separate — a dedicated account, sometimes at a bank in the state, sometimes interest-bearing by law. Mixing the deposit with your operating money is the failure that turns a small interest claim into a statutory penalty.

1. 01Open one account per property, or one clearly-labelled deposit account for the portfolio.
2. 02Record the deposit received, the date, and the account, on the rent ledger.
3. 03Tell the tenant in writing where it is held, if your rule requires it — several do, within a set number of days.
4. 04Pay the interest when the statute says: annually, at renewal, or with the final statement.

How much you may hold in the first place

The interest question only arises on money you were allowed to take. California, for example, now caps residential deposits at one month's rent, with two months available to a landlord who is a natural person (or an LLC whose members all are) owning no more than two residential rental properties with four or fewer units between them, and not when the tenant is a service member (Civ. Code § 1950.5, checked 2026-10-18). Caps elsewhere run from one month to none at all.

The state-by-state picture, with the return clocks, is in the security deposit laws guide.