Security Deposit Interest Calculator
Calculate the interest accrued on a security deposit over a rental period using simple or compound interest.
Formulas
Simple Interest:
I = P × r × t
A = P + I
Compound Interest (Annually):
A = P × (1 + r)t
I = A − P
Compound Interest (Monthly):
A = P × (1 + r/12)12t
I = A − P
Where: P = Principal (deposit), r = Annual interest rate (decimal), t = Time in years, I = Interest earned, A = Total amount.
Assumptions & References
- Simple interest is calculated as a flat percentage of the principal for the entire period.
- Annual compound interest compounds once per year; monthly compounds 12 times per year.
- Many U.S. states (e.g., New York, New Jersey, Massachusetts) legally require landlords to pay interest on security deposits — rates vary by state and are often set annually by the state banking department.
- Additional months are converted to a fractional year (months / 12) for calculation purposes.
- This calculator does not account for partial-month proration beyond the month input or state-specific tiered rates.
- Always verify the applicable interest rate and compounding method with your local tenancy laws or housing authority.