Chicago, Illinois: security deposit interest
Chicago requires a landlord who holds a security deposit or prepaid rent for more than six months to pay the tenant interest, at a rate the City Comptroller announces on the first business day of each January.
Cited to Municipal Code of Chicago § 5-12-080 (Security deposits; the interest duty and the account rules) and 4 more sources · Verified August 28, 2026
For rental agreements made or renewed in 2026 that rate is 0.01%. Interest accrues from the first day of the rental term rather than from the seventh month, and it must be paid in cash or as a rent credit within 30 days after the end of each 12-month rental period, with the deposit and any remaining interest returned within 45 days of move-out. The rate travels with the lease: an agreement carries the rate for the year it was entered into, and a renewal picks up the rate in force when it renews. Chicago also requires the deposit to sit in a federally insured, interest-bearing Illinois account that is never commingled with the landlord's own money, and a failure anywhere in these rules costs the landlord two times the deposit plus interest, court costs and attorney's fees.
Chicago deposit interest at a glance
| Interest owed under local law | Yes — required by local law |
|---|---|
| How the rate is set | A figure announced on a published cycle |
| Current figure | 0.01% for rental agreements made or renewed between January 1 and December 31, 2026, announced by the City Comptroller in a notice dated December 31, 2025. |
The rate
Section 5-12-081 sets the rate by survey rather than by formula in the abstract. During December of each year the City Comptroller reviews the rates paid on savings accounts, insured money market accounts and six-month certificates of deposit at commercial banks in the city, and on the first business day of the year announces those three rates as of the last business day of the prior month at the commercial bank with the most branches in Chicago — Chase Bank for 2026 — together with their average. That average is the rate for rental agreements governed by the ordinance and "made or renewed after the most recent announcement." Section 5-12-080(c) then locks each agreement to "the year in which the rental agreement was entered into," so a lease keeps its own year's rate for the life of that agreement and does not float year to year, while a renewal is priced at the rate in force when it renews. Section 5-12-082 adds a publication duty: the new rate must run for five consecutive business days in two or more newspapers of general circulation, and the city must publish a pamphlet carrying the new rate and the two years before it. Before July 1, 1997 the ordinance carried a flat five percent instead of a Comptroller-announced rate.
Accrual and payment
The duty attaches when the landlord holds a security deposit or prepaid rent for more than six months. Once it does, interest accrues from the beginning date of the rental term stated in the agreement — not from the seventh month — so crossing the six-month line makes the whole term interest-bearing. The landlord must pay the interest within 30 days after the end of each 12-month rental period, either in cash or as a credit against rent. At the end of the tenancy the deposit or its balance plus the required interest must be returned within 45 days after the tenant moves out, or within seven days where the tenant terminates under § 5-12-110(g) after a fire or casualty.
Who and what is covered
The ordinance reaches rented dwelling units in Chicago with no minimum building size — a single rented condominium or house is covered — but § 5-12-020 lists exclusions, and the first one matters most here: dwelling units in owner-occupied premises of six units or fewer are outside the deposit rules entirely, reached only by the notice rule in § 5-12-130(j) and the lockout ban in § 5-12-160. Also excluded are hotel, motel, inn, bed-and-breakfast, rooming house and boarding house units until the tenant has stayed 32 or more continuous days paying monthly rent; housing in hospitals, convents, monasteries, extended care facilities, asylums, not-for-profit homes for the aged, shelters and school-run dormitories; units occupied by a buyer or seller around a sale; units occupied by an employee whose right to be there depends on the job; and co-operative units held under a proprietary lease.
Custody of the deposit
Section 5-12-080(a)(1) requires the landlord to hold all security deposits in a federally insured, interest-bearing account at a bank, savings and loan association or other financial institution located in Illinois. The deposit and the interest due on it stay the tenant's property, may not be commingled with the landlord's assets, and are out of reach of the landlord's creditors, including a foreclosing mortgagee or a trustee in bankruptcy. A landlord may take the first month's rent and the deposit in one payment, but must move the deposit into a complying account within five business days (a)(2). The name and address of the institution must be disclosed in the written lease, or given in writing within 14 days where there is no written lease, with the same 14-day notice if the money moves to another institution (a)(3). Earnings in the account above the deposits and the interest owed on them are "excess interest" and holding them there is not commingling (a)(4).
Penalty for violation
A landlord who fails to comply with any part of § 5-12-080(a) through (e) owes the tenant two times the security deposit plus interest at the announced rate, and under § 5-12-180 a prevailing plaintiff also recovers court costs and reasonable attorney's fees. There is a narrower path for a payment that was timely but too small: under § 5-12-080(f)(2) a landlord who paid the interest inside the 30-day or 45-day window but paid too little escapes those damages unless the tenant gives written notice that the amount was deficient and, within fourteen days of that notice, the landlord neither pays the correct amount plus $50 nor gives a written explanation of how the interest was calculated. A tenant who disputes the explanation may sue, and a court that finds the calculation wrong awards the same two times the deposit plus interest.
How this interacts with state law
Illinois has its own Security Deposit Interest Act, 765 ILCS 715, but it reaches only lessors of residential property with 25 or more units and sets a different rate — the passbook savings rate at the largest Illinois-headquartered commercial bank as of December 31 before the lease began. Chicago's ordinance is both wider and stricter: it applies with no unit-count floor (apart from the owner-occupied six-unit exclusion), sets its own Comptroller-announced rate, requires a segregated federally insured Illinois account where the state Act requires no particular custody, and doubles the deposit as damages where the state Act awards the deposit once and only for a willful failure. A Chicago building of 25 or more units is subject to both, and in practice the local rule is the one that governs.
Published rate tables
Chicago security deposit interest rates
Each year's figure governs rental agreements made or renewed during that calendar year and stays with the agreement for its term, so the year to look up is the year the lease was signed or last renewed, not the year interest is being paid.
| Period | Rate | Note |
|---|---|---|
| rental agreements made before July 1, 1997 | 5% | A flat rate written into the ordinance itself. The Comptroller-announced rate replaced it when § 5-12-081 was added, effective July 1, 1997, so this is a regime rather than a single year. Interest was first required on security deposits from November 6, 1986 and on prepaid rent from January 1, 1992. |
| calendar year 1997 | 3.38% | The city's series lists 3.38% for 1997 alongside a separate flat five percent for everything before July 1, 1997, the date the Comptroller-announced rate took over. |
| calendar year 1998 | Gap in the official series | An official gap: the city's own published series runs from 1999 straight back to 1997 on both language sides of its lease rider, and no 1998 figure appears in any city publication. It cannot be derived from the years on either side and must not be estimated. |
| calendar year 1999 | 2.63% | |
| calendar year 2000 | 2.71% | |
| calendar year 2001 | 3.1% | |
| calendar year 2002 | 0.83% | |
| calendar year 2003 | 0.52% | |
| calendar year 2004 | 0.42% | |
| calendar year 2005 | 1.01% | |
| calendar year 2006 | 1.71% | |
| calendar year 2007 | 1.68% | |
| calendar year 2008 | 1.26% | |
| calendar year 2009 | 0.12% | |
| calendar year 2010 | 0.073% | |
| calendar year 2011 | 0.073% | |
| calendar year 2012 | 0.057% | |
| calendar year 2013 | 0.023% | |
| calendar year 2014 | 0.013% | |
| calendar year 2015 | 0.01% | |
| calendar year 2016 | 0.01% | |
| calendar year 2017 | 0.01% | |
| calendar year 2018 | 0.01% | |
| calendar year 2019 | 0.01% | |
| calendar year 2020 | 0.01% | |
| calendar year 2021 | 0.01% | |
| calendar year 2022 | 0.01% | |
| calendar year 2023 | 0.01% | |
| calendar year 2024 | 0.01% | |
| calendar year 2025 | 0.01% | |
| calendar year 2026 | 0.01% | Announced by the City Comptroller in a notice dated December 31, 2025, from the rates at Chase Bank as of that date: savings 0.01 percent, insured money market 0.01 percent and six-month certificate of deposit 0.01 percent on a $1,000 deposit. |
A current series — the City Comptroller, on the first business day of each January. Source: official source · verified August 28, 2026.
Work out a figure: the deposit interest calculator computes Chicago interest from this table using the locality's own published method.
Notes and caveats
- Which year's rate applies to a given lease — This is the question most calculations get wrong. Section 5-12-080(c) ties the rate to "the year in which the rental agreement was entered into," and § 5-12-081 says an announced rate governs agreements "made or renewed after the most recent announcement." So a lease signed in 2019 carries 0.01% for its whole term rather than re-pricing every January, and a renewal signed in 2026 carries the 2026 rate from the renewal forward. Treat a renewal as a new entry year.
- Six months is a trigger, not a starting line — The duty only attaches once the landlord has held the deposit or prepaid rent for more than six months. But once it attaches, interest is owed "accruing from the beginning date of the rental term specified in the rental agreement" — the whole term, back to day one. A landlord who returns a deposit at month seven owes interest on all seven months, not on the one month past the threshold.
- 1998 is missing from the city's own series — The city's published table jumps from 1999 to 1997, on both the English and Spanish sides of its official lease rider. No 1998 rate appears in any city publication. That year is a gap in the source itself, not something to be filled in by averaging its neighbours; a calculation touching a 1998 lease has to be resolved with the city rather than estimated.
- Owner-occupied buildings of six units or fewer are outside the rule — Section 5-12-020(a) excludes dwelling units in owner-occupied premises containing six units or fewer from the ordinance, keeping only the notice rule in § 5-12-130(j) and the lockout ban in § 5-12-160. A tenant in a two-flat where the owner lives in the other unit is owed no ordinance interest, no separate account and no doubled damages. Below that line the state Security Deposit Interest Act does not help either, because it starts at 25 units.
- Paying too little interest has a cure path — A landlord who pays the interest on time but calculates it wrong is not automatically liable for two times the deposit. Under § 5-12-080(f)(2) the tenant must first give written notice that the amount was deficient; the landlord then has fourteen days to pay the difference plus $50 or to give a written explanation of the calculation. Only if neither happens — or if a court later finds the explanation's arithmetic wrong — do the doubled damages follow. As printed, that subsection says the landlord "shall not be liable for damages under subsection (f)(2)" where the plain referent is (f)(1); the mis-numbering is in the official text and is quoted here as it stands.
- The city's web notice lists two components; the rider lists three — Section 5-12-081 averages three rates: savings, insured money market and a six-month certificate of deposit. The Comptroller's online notice and the housing department's rate page each show only the savings and certificate figures for 2026, while the department's lease rider shows all three. Every component is 0.01% for 2026, so the announced rate is unaffected — but a reader who needs to see the full computation should use the rider. The notice is also dated December 31, 2025, one day before the January announcement date the ordinance names.
- The rate has to be attached to the lease — Under § 5-12-170 every written lease, new or renewed, must come with two attachments: the city's summary of the ordinance and a separate summary of the security deposit interest rate showing the current year's rate and the rate for each of the two prior years. A landlord who leaves them off gives the tenant the right to terminate the lease on written notice and owes $100 in damages if the tenant proves the violation in court.
Cite this page: "Landlord Atlas, Chicago, Illinois: security deposit interest (verified August 28, 2026), landlordatlas.com/laws/deposit-interest/illinois/chicago/" — free to cite and quote with a link (how these records are verified).
Citations
- Municipal Code of Chicago § 5-12-080 (Security deposits; the interest duty and the account rules) · (c) (verified 2026) Official source
- Municipal Code of Chicago § 5-12-081 (Interest rate on security deposits) (verified 2026) Official source
- Municipal Code of Chicago § 5-12-082 (Interest rate notification) (verified 2026) Official source
- City of Chicago Department of Finance, notice setting the interest rate on rental agreement security deposits (December 31, 2025) (verified 2026) Official source
- City of Chicago Department of Housing, security deposit interest rates (the published year-by-year series) (verified 2026) Official source
How this record was verified: Complete read of Municipal Code of Chicago §§ 5-12-080 (Security deposits), 5-12-081 (Interest rate on security deposits) and 5-12-082 (Interest rate notification) in the city's official code as published in the current 2026 supplement, with each section's history line examined for any 2025 or 2026 amendment; § 5-12-020 (exclusions), § 5-12-170 (summary attached to the rental agreement) and § 5-12-180 (attorney's fees) read for coverage and remedies; the City Comptroller's signed rate notice dated December 31, 2025, the Department of Housing's security deposit interest rate page, and the department's 2026 bilingual lease rider read in full for the current figure, its components and the published year-by-year series; and the city's Department of Housing page and the mayor's announcement of the Protecting Renters Ordinance read for that measure's status, with every occurrence of the word 'interest' on both pages placed in context.
This page records local law on deposit interest. The statewide position — Illinois requires deposit interest only from lessors of residential property with 25 or more units, and only on a deposit held more than six months. — lives on the Illinois deposit-interest page with its own citations and verification date.