Does the deposit have to be in an interest-bearing account in Michigan?

No statute addresses whether the account must bear interest. Michigan's rule is about where the money sits, not about keeping it apart. "The security deposit shall be deposited in a regulated financial institution" (MCL 554.604(1)).

What happens if a landlord does not pay deposit interest in Michigan?

No statutory penalty reaches an interest violation specifically.

Does a landlord have to pay interest on a security deposit in Michigan?

Verified August 28, 2026 All Michigan topics →

Michigan does not require landlords to pay tenants interest on a security deposit — no section of its 1972 security-deposit act gives the tenant interest, earnings or any accretion.

Cited to MCL 554.604 (security deposit, disposition; bond) (1), (2) and 4 more cited sources · Verified August 28, 2026

Michigan's account rule is also weaker than it is usually reported to be. The statute says only that the deposit "shall be deposited in a regulated financial institution", and a landlord who instead posts a cash or surety bond with the Secretary of State, covering the deposits up to $50,000 plus a quarter of any excess, "may use this fund for any purposes he desires". There is no trust, no escrow account, no bar on commingling and no requirement that the account bear interest. A bonded Michigan landlord may spend the deposit money outright, which cannot be squared with a tenant entitlement to what the money earns.

Michigan deposit interest at a glance

Interest owed to the tenant	No — no statute addresses it
How the rate is set	No rate exists — there is no interest duty
Current figure	No published figure exists
Rate rules	No rate rules — no duty exists
Accrual and payment	No payment duty exists
Who and what is covered	No statutory conditions stated — see the summary and notes
Statute controls where or how the deposit is held	Yes
Interest-bearing account required	No statute addresses whether the account must bear interest
Custody rules	Michigan's rule is about where the money sits, not about keeping it apart. "The security deposit shall be deposited in a regulated financial institution" (MCL 554.604(1)). That is the whole of the location duty: nothing requires the account to be separate from the landlord's own money, nothing calls it a trust or escrow account, nothing prohibits commingling, and nothing requires the money to be identifiable tenant by tenant. The duty is also escapable in full. A landlord who deposits with the Secretary of State a cash bond, or a surety bond written by a surety company licensed in Michigan and acceptable to the Attorney General, securing the entire deposits up to $50,000 and 25 percent of any amount above that, "may use the moneys so deposited for any purposes he desires". Section 554.605 says the same thing from the tenant's side: the deposit is the tenant's lawful property until the landlord establishes a right to it, and "as long as the bond provision is fulfilled, the landlord may use this fund for any purposes he desires". The bond is for the benefit of the people who made the deposits, and a person for whose benefit it is written may sue on it (§ 554.604(2)). No later than 14 days after the tenant takes possession the landlord must give written notice of the name and address of the financial institution or surety (§ 554.603), and the act's requirements may not be waived except as it specifically provides (§ 554.606).
Penalty for violation	No statutory penalty reaches an interest violation specifically
Local rules	None noted for this state

Cite this page: "Landlord Atlas, Michigan Security Deposit Interest Laws (verified August 28, 2026), landlordatlas.com/laws/deposit-interest/michigan/" — free to cite and quote with a link (how these records are verified). Everything above is cited in the citations section below.

Check the verified Michigan answer — and every state and city that differs — in the deposit interest calculator — free, no signup, built on the same verified Michigan law as this page.

Notes and caveats

The location rule, in full — Section 554.604(1) reads: "The security deposit shall be deposited in a regulated financial institution. A landlord may use the moneys so deposited for any purposes he desires if he deposits with the secretary of state a cash bond or surety bond written by a surety company licensed to do business in this state and acceptable to the attorney general to secure the entire deposits up to $50,000.00 and 25% of any amount exceeding $50,000.00." The Attorney General may find a bond unacceptable only on reasonable criteria relating to its sufficiency, and must give the landlord written reasons.
Whose money it is, and what the landlord may do with it — Section 554.605 states that for the purposes of the act the security deposit is considered the lawful property of the tenant until the landlord establishes a right to it, and then adds: "as long as the bond provision is fulfilled, the landlord may use this fund for any purposes he desires." It is the plainest statement in Michigan law that the deposit is not held as an investment for the tenant.
The act's title promises something no section delivers — The long title of 1972 Public Act 348 describes an act "to regulate the payment, repayment, use and investment of security deposits". No operative section of the act contains any investment or interest provision. That word in the title is the closest Michigan law comes to the subject, and it is a description of the act's purpose rather than a duty. A source citing the title as if it created an interest duty is citing a heading.
Notice, and no waiver — The landlord must notify the tenant in writing, no later than 14 days after the tenant takes possession, of the landlord's name and address and of the name and address of the financial institution or surety required by § 554.604 (§ 554.603). The act's requirements may not be waived by the parties except as it specifically provides (§ 554.606), and a deposit "shall be required and maintained in accordance with the terms of this act" (§ 554.602).
Currency — Sections 554.604 and 554.605 both carry the history line 1972, Act 348, Eff. Apr. 1, 1973 and have never been amended. The Michigan Compiled Laws are published as complete through Public Act 91 of 2026; the act as a whole was last amended by 2024 Public Act 179, effective April 2, 2025, which concerns source-of-income provisions rather than deposit custody. Of the twelve measures affecting the act in the 2025-2026 session, none reaches the account provisions or deposit interest.

Common questions: Michigan deposit interest

Each answer is the verified value from the table above, restated as a direct answer. Free to quote with a link to this page.

What is the Michigan security deposit interest rate right now?: No published figure exists.
When must a landlord pay or credit deposit interest in Michigan?: No payment duty exists.
Does the deposit have to be in an interest-bearing account in Michigan?: No statute addresses whether the account must bear interest. Michigan's rule is about where the money sits, not about keeping it apart. "The security deposit shall be deposited in a regulated financial institution" (MCL 554.604(1)).
What happens if a landlord does not pay deposit interest in Michigan?: No statutory penalty reaches an interest violation specifically.
Do any cities or counties in Michigan have their own deposit-interest rules?: None noted for this state.

Citations

MCL 554.604 (security deposit, disposition; bond) · (1), (2) (verified 2026) Official source
MCL 554.605 (security deposit as property of tenant) (verified 2026) Official source
MCL 554.603 (notice of the financial institution or surety) (verified 2026) Official source
MCL 554.606 (requirements of the act may not be waived) (verified 2026) Official source
1972 Public Act 348 (act index and long title) (verified 2026) Official source

How this record was verified: Direct read of all 21 sections of 1972 Public Act 348, Michigan's security-deposit act — MCL 554.601, 554.601a, 554.601b, 554.601c, 554.601d, and 554.602 through 554.616 — each read in full on the Legislature's Michigan Compiled Laws service, together with the act index page carrying the act's long title; every occurrence of "interest", "escrow", "trust", "segregate", "commingle", "invest", "separate account" and "accrue" across the 20 section texts examined in context, which produced five hits, all of them the property sense of "interest" in § 554.614 or "accrued" rent in § 554.613, and no occurrence at all of escrow, trust, segregation, commingling, investment or a separate account in any section, including § 554.604 itself; and the Legislature's list of 2025-2026 bills affecting Act 348 of 1972 read in full, twelve measures, none of them touching § 554.604, § 554.605 or deposit interest. The negative is stated for Michigan's security-deposit act, which by its own terms governs deposits exclusively and may not be waived.