I’ve been covering Chicago housing long enough to know this: renters obsess over move-in fees, but somehow forget about the quiet little line item that can put real money back in their pocket—the security deposit interest rate. It’s not flashy. It won’t buy you a Cubs season ticket. But if you’re renting in Chicago, it does matter, and landlords are legally required to follow the rules.
Let’s break down how Chicago’s security deposit interest works, what rate applies, and how to check your lease so you don’t leave money on the table.
What Is Security Deposit Interest in Chicago?
Under Chicago’s Residential Landlord and Tenant Ordinance (RLTO), landlords who collect a security deposit—not a move-in fee—must pay interest on that deposit.
This rule applies citywide and has been enforced for decades, even if many landlords would prefer you forget about it.
The Basic Rule (In Plain English)
If all of the following are true:
- You paid a security deposit
- The unit is within the City of Chicago
- You stayed six months or longer
Then your landlord owes you interest on that deposit.
Who Has to Pay Security Deposit Interest?
Not every rental triggers the rule, but most traditional Chicago apartments do.
Landlords Who Must Pay Interest
- Owners of residential rental units in Chicago
- Property managers holding deposits on behalf of owners
- Buildings not exempt under RLTO (most are covered)
Common Exemptions
Some properties are exempt from the RLTO, including:
- Owner-occupied buildings with six units or fewer
- Certain co-ops or owner-shared housing situations
If you’re unsure, assume the rule applies until proven otherwise.
What Is the Chicago Security Deposit Interest Rate?
Here’s where renters often get tripped up.
The Rate Changes Every Year
The Chicago security deposit interest rate is:
- Set annually
- Based on the average interest rates paid by major Chicago banks
- Published each year by the City of Chicago Comptroller
There is no flat percentage written into the law. One year it may be higher; another year, barely noticeable. But legally, something is owed.
How the Interest Is Paid
Landlords must either:
- Pay the interest annually, or
- Credit it toward your rent, or
- Pay it out when the deposit is returned
Failing to do any of the above is a violation.
How Much Money Are We Talking About?
Let’s keep expectations realistic.
Real-World Example
- Security deposit: $1,800
- Lease term: 12 months
- Annual interest: Typically a small percentage
You’re not getting rich—but across multiple years or higher deposits, the amount adds up. More importantly, failure to pay interest can expose landlords to penalties.
Under the RLTO, tenants may be entitled to:
- The unpaid interest
- Plus damages
- Plus attorney’s fees in some cases
That’s why this matters.
How to Check Your Lease for Security Deposit Interest
Most leases don’t shout this from the rooftops. You have to know where to look.
Step 1: Confirm It’s a Security Deposit
Check your lease language carefully.
- “Security Deposit” = interest owed
- “Move-In Fee” = no interest required
If it’s refundable and held during the lease, it’s likely a deposit.
Step 2: Search for These Terms
Use Ctrl + F and look for:
- “Security deposit”
- “Interest”
- “RLTO”
- “Chicago Municipal Code”
Some landlords include boilerplate disclosures. Others conveniently don’t.
Step 3: Check Annual Statements
Landlords are required to provide:
- Annual interest statements, or
- A rent credit showing interest applied
If you’ve never received either, that’s a red flag.
What If Your Lease Is Silent on Interest?
This is where Chicago renters get nervous. Don’t.
Important Truth
The law applies whether or not the lease mentions it.
A missing clause does not cancel your rights. RLTO protections are statutory, not optional.
Security Deposit vs. Move-In Fee: Why This Matters
Chicago landlords increasingly prefer move-in fees for one reason: they don’t accrue interest.
Quick Comparison
Security Deposit
- Refundable
- Earns interest
- Protected by RLTO
Move-In Fee
- Non-refundable
- No interest
- Fewer tenant protections
Knowing which one you’re paying changes your financial rights.
What Buyers and Relocators Should Know
If you’re moving to Chicago from another city, this rule surprises people.
Many cities don’t require deposit interest. Chicago does.
That’s why working with someone who understands local rental law—not just listings—matters.
Summary: What Chicago Renters Should Remember
- Security deposits in Chicago earn interest
- The rate changes yearly and is set by the city
- Landlords must pay or credit that interest
- Lease silence does not remove your rights
- Move-in fees are different and don’t earn interest
If you’re paying a deposit, you should be tracking this.
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