Chicago law provides that tenants earn interest on their security deposits. But for nearly a decade, Chicago renters have been earning essentially nothing on their security deposits.

The interest rate on security deposits is set by a formula established by law, and calculated by the City of Chicago Comptroller. Since 2016, the interest rate published by the Comptroller's office has been frozen at 0.01%. Yes, you read that correctly: one one-hundredth of one percent. If you paid a $2,000 security deposit, you're legally owed a grand total of 20 cents per year in interest. Over a typical three-year lease, that's 60 cents—not even enough to buy a pack of gum.

Meanwhile, your landlord has been holding your money. And unlike you, they haven't been limited to earning 0.01% on it.

The Promise Behind the Law

When Chicago passed the Residential Landlord Tenant Ordinance (RLTO) security deposit interest provisions, the policy goals were clear:

First, tenants shouldn't be locked out of the value of their money while landlords hold their deposits—sometimes for years. A security deposit isn't a gift; it's the tenant's money being held in trust. While it sits in the landlord's control, tenants lose the opportunity to invest it, save it, or earn interest on it themselves.

Second, the ordinance sought to prevent landlords from profiting off tenant deposits. Without an interest requirement, landlords could deposit thousands of dollars in security deposits into high-yield accounts, pocket all the earnings, and return only the principal to tenants at lease-end. The RLTO closed that loophole by requiring landlords to pay interest to tenants.

But there's a problem: the current system has created exactly the situation the RLTO was designed to prevent.

How Did We Get Here?

The RLTO establishes a straightforward formula for calculating the annual interest rate. According to Section 5-12-081, each December the City Comptroller must:

1. Identify the commercial bank with the most branches in Chicago (currently Chase Bank)
2. Check the interest rates on three account types: savings accounts, insured money market accounts, and six-month certificates of deposit
3. Average those three rates
4. Announce that average as the required interest rate for the following year

Simple enough. So why has the rate been stuck at 0.01% since 2016?

The Math Doesn't Add Up

Here's where things get interesting. The Comptroller's most recent announcement for 2026 states the rate is based on:

• Chase Savings Account: 0.01%
• Chase Six-Month CD: 0.01%

But a quick check of Chase's publicly available rates tells a different story. As of late 2025:

• Chase Savings Account: 0.01% APY ✓
• Chase Six-Month CD: 0.75% APY

That's not a typo. Chase's own website lists their six-month CD rate at 0.75%—seventy-five times higher than what appears in the Comptroller's calculation.

If the Comptroller used Chase's actual published CD rate, the average of just these two accounts would be 0.38%—still modest, but nearly 40 times higher than the current 0.01% rate. On a $2,000 deposit, that's the difference between earning 20 cents per year and $7.60 per year.

(And notably, Chase doesn't appear to offer an "insured money market account" product, which means the calculation may only be averaging two rates instead of three—making the discrepancy even more significant.)

The Opportunity for Landlord Profiteering on Deposits

While tenants have been earning essentially zero on their deposits, market interest rates have fluctuated considerably. Even basic savings accounts at online banks have offered rates of 3–5% in recent years. Money market funds have done even better.

A landlord managing 20 units with $2,000 deposits each controls $40,000 in tenant security deposits. At 0.01%, they owe tenants $4 per year total. But if that same $40,000 is placed in a regular 4% high-yield savings account, it earns $1,600 per year. The landlord keeps $1,596 of earnings generated by tenant money.

Scale that up to a property management company with 200 units, and you're looking at $15,960 per year in interest earnings that landlords pocket while owing tenants just $40.

This is precisely the windfall the RLTO was designed to prevent.

The Squeeze on Potential Home Buyers

Over the past few years, mortgage rates have climbed dramatically. First-time homebuyers—who are almost always current or former renters—have faced mortgage interest rates of 6%, 7%, or even higher. These are the same people who've been earning 0.01% on their security deposits.

Think about the absurdity: A Chicago renter trying to save for a down payment gets virtually nothing on their $2,000 security deposit while it sits with their landlord. When they finally scrape together enough for a down payment and apply for a mortgage, that same bank demands 7% interest on a $300,000 loan—$21,000 per year.

Renters get squeezed from both directions.

When interest rates rise, prospective homebuyers feel the pain immediately. Monthly mortgage payments balloon. Houses become unaffordable. Dreams of homeownership slip further away. But during that same period, tenants see none of the benefit when those same rising rates should be increasing the interest owed on their security deposits.

The RLTO's formula was designed to tie security deposit interest to market rates precisely to prevent this kind of disconnect.

Instead, we have a system where rising interest rates are a one-way street: tenants pay more when they borrow, but earn nothing when their money is being held.

We Asked Questions. The City Didn't Answer.

In October 2025, CTM Legal Group attorney William M. Tasch, along with other tenant-oriented attorneys, reached out to the City Comptroller's office about this discrepancy. We respectfully pointed out that the data being used in the calculation appeared to be incorrect, and we requested clarification on the methodology.

We received no response.

More disappointingly, when the Comptroller announced the 2026 security deposit interest rate in January 2026, it was the same calculation: 0.01%, based on the same questionable figures.

Taking the Next Step: A FOIA Request

Today, we have filed a Freedom of Information Act (FOIA) request with the City of Chicago, demanding to see the documents and methodology being used by the Comptroller's office to calculate the security deposit interest rate.

If the Comptroller's methodology is sound and the calculations are accurate, the FOIA response will show that. If there's been an error or oversight, the documents will reveal it.

What Went Wrong?

• The rates checked on "the last business day" of December differ from publicly advertised rates
• There's a specific CD product with a $1,000 minimum deposit (as specified in the ordinance) that has a much lower rate than Chase's standard CD offerings
• The methodology has inadvertently locked onto the wrong data source
• There's a calculation or transcription error that's been repeated year after year

Our FOIA request should help answer these questions.

What Should Happen

1. Respond to our FOIA request with the documents and information that will allow the public to understand how these calculations are being made
2. Respond to inquiries from attorneys and advocates who are trying to ensure the law is being properly implemented
3. Verify the calculation methodology to ensure it reflects actual current rates from the bank with the most Chicago branches
4. Publish the specific data sources used for each account type, including which CD products are being checked and what their actual rates are
5. Correct the rate and publish it if there has been an error in the calculation

The Bigger Picture

Tenants deserve answers. More importantly, they deserve the interest they're legally owed. And aspiring homeowners deserve a system that doesn't squeeze them from both directions.

We'll be following up on our FOIA request and sharing what we learn.

Have Questions?

Have questions about your rights under the Chicago RLTO? CTM Legal Group has handled hundreds of landlord-tenant matters and can help you understand your options. Contact us for a consultation.

Disclaimer: This blog post is for informational purposes only and does not constitute legal advice. The calculations and analysis presented are based on publicly available information and may not reflect all relevant factors in the City Comptroller's methodology.