Security deposit interest calculator
A deposit is the tenant's money in your custody. In a long list of states and cities you owe interest on it, and paying it late costs more than paying it. This works the figure and the balance you actually return.
Pre-filled with a one-month deposit held for 26 months. Put YOUR state or city's required rate in the rate field.
Interest owed on $1,850.00 after 26 months
$60.12
- Deposit held
- $1,850.00
- Simple interest
- $60.12
- If your rule compounds annually
- $60.65
- Admin fee retained
- $0.00
- Effective rate over the term
- 3.25%
- Return with the deposit
- $1,910.13
Some ordinances compound; most state statutes do not.
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.
Where to find your rate
Search your state's landlord-tenant statute for "security deposit" and "interest", then your city clerk's site. Cities that require interest almost always publish the current year's rate on one page.
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.
- 01Open one account per property, or one clearly-labelled deposit account for the portfolio.
- 02Record the deposit received, the date, and the account, on the rent ledger.
- 03Tell the tenant in writing where it is held, if your rule requires it — several do, within 30 days.
- 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 a small number of properties (Civ. Code § 1950.5, checked 2026-09-04). 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.
Related in the binder
