Chicago Security Deposit Interest: Rate, Rules, and Penalties

The Chicago security deposit interest rate for 2026 is 0.01%, effective January 1, 2026.¹ That rate has held steady at 0.01% every year since 2015. On a $1,500 deposit, it works out to 15 cents for the year. The dollar amount is small. The legal obligation to pay it, on time and with the right paperwork, is not: a landlord who gets it wrong can owe the tenant twice the full deposit plus attorney’s fees.

How the Rate Is Set Each Year

The rate is recalculated each December by the Chicago City Comptroller. The Comptroller looks at the interest rates on savings accounts, insured money market accounts, and six-month certificates of deposit at the commercial bank with the most branches in Chicago, then averages those three rates.² The average becomes the official rate for the following calendar year. Because commercial deposit rates in Chicago have sat near zero for over a decade, the resulting figure has rounded to 0.01% year after year.

Which Rentals the Rule Covers

Chicago’s Residential Landlord and Tenant Ordinance (RLTO), codified at Section 5-12-080 of the Municipal Code, governs security deposit interest for most rental units within city limits.³ It applies whether the lease is written or oral and reaches apartments, condos, townhomes, and multi-unit buildings.

There is one exemption worth knowing. If your landlord lives in the building and the building has six or fewer units, the interest requirements do not apply.⁴ Both conditions have to be true. A six-unit building with an absentee owner is covered; a ten-unit building with the owner on-site is also covered.

When You Should Receive the Interest

Your landlord must pay you the interest earned on your deposit within 30 days after the end of each 12-month rental period.⁴ The 12-month clock runs from the date your tenancy began, not from January 1. If your lease started on March 15, the landlord has until April 14 of the following year to deliver the interest for that period.

Payment can take one of two forms: cash or a check paid directly to you, or a credit applied to your next rent payment.³ Either method satisfies the rule as long as it happens inside the 30-day window. There is no administrative grace period. At 15 cents a year, delivering the payment on time costs the landlord nothing and avoids a penalty worth thousands.

Where the Deposit Must Sit

Your security deposit does not become the landlord’s money. Under the RLTO, it remains your property for the duration of the tenancy and must be held in a federally insured, interest-bearing account at a bank or financial institution located in Illinois.³ The landlord cannot mix it with their own operating funds, and the landlord’s creditors cannot claim it, including in foreclosure or bankruptcy.

A narrow exception handles the initial payment. If you paid first month’s rent and the deposit together in a single check or electronic transfer, the landlord may deposit the full amount into one account temporarily, but has to move the deposit portion into a separate compliant account within five business days.³

Receipts and Disclosures Tied to the Deposit

When you hand over the deposit, the landlord must give you a written receipt showing the amount paid, the date received, a description of the unit, and the name of the person who received it, including the landlord’s name if an agent collected it. The person receiving the deposit has to sign it.³ For electronic payments, an electronic receipt is allowed.

The landlord also has to disclose the name and address of the bank holding the money. If you have a written lease, that information should appear in the lease. If there is no written lease, the landlord has 14 days from receiving the deposit to tell you in writing where it is held. If the deposit is later moved to a different bank, another 14-day notice is required.³

On top of the deposit-specific paperwork, the landlord has to give you a copy of the RLTO Summary prepared by the Commissioner of Housing.⁴ The summary describes your rights, the current interest rate, and the landlord’s obligations. Skipping either the receipt or the summary is itself a violation and carries the same penalties as skipping the interest payment.

What Happens if the Landlord Gets It Wrong

The penalties are built to make small mistakes expensive. If a landlord fails to comply with any part of the security deposit rules, the tenant is entitled to damages equal to two times the full security deposit, plus interest at the rate set under Section 5-12-081.³ On a $1,500 deposit, the damages alone come to $3,000. The landlord also pays the tenant’s court costs and reasonable attorney’s fees.⁴ Fee awards often exceed the deposit itself, which is why tenant-side attorneys take these claims.

The ordinance uses “shall be awarded” language, meaning the penalty is mandatory once a violation is proven. The tenant does not need to show the landlord acted in bad faith. Missing the interest payment, the receipt, or the bank disclosure is enough. Failure to provide a receipt at the time of the deposit also triggers an extra remedy: the immediate return of the entire deposit, regardless of any damage to the unit.³

If You Were Not Paid

If a 12-month rental anniversary has passed and the 30-day window closed without your interest payment, start by sending the landlord a written demand that identifies the violation and the remedy you want. Some landlords settle quickly once they understand that the statutory exposure is many multiples of what they actually owe. Keep your lease, any receipts you received or evidence that you never got one, and records of every communication. If no RLTO Summary was handed over when you signed, note that too; by itself it is enough to trigger the two-times-deposit penalty.

If the landlord does not resolve it, a small claims filing is the usual next step. Because attorney’s fees shift to the landlord when the tenant wins, many tenant lawyers will take these cases on contingency, so filing does not have to come out of pocket.

1
City of Chicago. Security Deposit Interest Rates
2
American Legal Publishing Corporation. Municipal Code of Chicago 5-12-081 – Interest Rate on Security Deposits
3
American Legal Publishing Corporation. Municipal Code of Chicago 5-12-080 – Security Deposits
4
City of Chicago. Chicago Residential Landlord and Tenant Ordinance