How Cities Decide the Annual Interest Rate
Unlike statewide security-deposit statutes, which stay silent on earnings, several California municipalities publish an annual percentage landlords must credit or pay. Each city appoints either its rent board or housing department to compare financial benchmarks—usually the 12-month average of the Federal Reserve’s Six-Month Treasury Bill, the passbook savings account rate, or the smaller of two separate indexes. The figure is announced in an official bulletin each December and takes effect on January 1 for the next calendar year. Landlords may either compound monthly (rare) or apply simple interest; most choose simple because ordinances permit it and the math is easier when tenants move mid-year.
The boards weigh market liquidity and consumer inflation when selecting a rate. A Treasury Bill index tracks federal borrowing costs and closely mirrors low-risk bank yields, so it prevents windfalls while still compensating tenants for the purchasing power lost to inflation. A lower rate also discourages owners from inflating rents purely to offset expensive interest obligations. Historically, published rates hover between 0.5 % and 2 %, but 2025’s rebound from pandemic lows pushed most cities above 1.5 %—San Francisco hit 2 %, its highest since 2010.
The policy purpose is two-fold: (1) tenants receive modest growth on funds they could invest elsewhere and (2) landlords retain an incentive to refund deposits promptly. Because California security deposit law forbids commingling funds with personal accounts, owners already hold the money in trust; paying interest acknowledges that custodial benefit.
For tenants, awareness is vital: if the landlord omits interest from the refund check—or silently credits an old rate—you may claim the difference plus statutory penalties. The calculator above simplifies that first step so renters can enter negotiations backed by numbers.
City-by-City Rules & Deadlines
San Francisco
The San Francisco Rent Board mandates written notice of the exact interest rate within 30 days of tenancy start and requires landlords to disburse accrued interest every year on the rollover date that matches the anniversary of occupancy—or credit it against the following month’s rent with conspicuous ledger notation. Failure to pay can trigger triple damages under the city’s Rent Ordinance §37.9F.
Los Angeles
Under LA’s Rent Stabilization Ordinance (RSO), owners must apply or refund interest within 30 days of tenancy anniversary. They can deduct an “administrative fee” set by LAHD (currently $15) from the interest owed, but only if they provide an itemized statement. Missed payments allow tenants to withhold the interest amount from future rent without penalty.
Berkeley & Oakland
Both East Bay cities credit interest annually. Berkeley’s Rent Stabilization Board allows a direct rent offset; Oakland requires payment by a check or Venmo-type transfer unless the tenant consents to a credit. Penalties include 1.5 × the unpaid amount plus a $500 administrative fine.
Santa Monica & West Hollywood
These coastal jurisdictions publish rates similar to Los Angeles but set stricter payment deadlines—Santa Monica’s by January 31, West Hollywood’s by the first banking day in February. Ordinances forbid deducting administrative fees and impose $500 civil citations for late payment.
Richmond & San Jose
Richmond ties its rate to the lower of the 12-month Treasury or Local Agency Investment Fund yield. San Jose instead uses the average national savings account rate reported by the FDIC. Both require payout at move-out only; annual payments are optional.
Other Smaller Cities
A handful of jurisdictions—Alameda, East Palo Alto, Thousand Oaks—previously mandated interest but suspended enforcement, so the current effective rate is 0 %. Always verify with your city’s housing department before relying on zero interest; ordinances can revive dormant rules without notice.
| City | 2025 Rate % | Source |
|---|---|---|
| San Francisco | 2.00 % | SF Rent Board Bulletin |
| Oakland | 1.80 % | Oakland RAP Memo |
| Berkeley | 1.70 % | Berkeley RSB Update |
| Los Angeles | 1.50 % | LAHD RSO Notice |
| Santa Monica | 1.60 % | SMRC Annual Sheet |
| West Hollywood | 1.75 % | WeHo Rent Stabilization |
| Richmond | 1.90 % | Richmond Rent Program |
| San Jose | 1.40 % | San Jose Housing Dept. |
| Other Cities | 0.00 % | No interest required |
How to Claim Your Interest
Start by confirming the exact dollar amount using the calculator or your city’s own worksheet. Next, ask informally— send an email or text reminding the owner of the ordinance and your move-in anniversary. Many landlords simply forget and will issue a check within days. If that nudge fails, mail a certified security-deposit interest demand letter citing the governing ordinance and giving at least seven days to respond. Our generator on the demand-letter page produces ready-to-send language.
Some tenants withhold the interest from their next rent payment. That tactic is legal in Los Angeles and Berkeley when executed precisely: give written notice, calculate correctly, and save proof of delivery. If the landlord disputes, be prepared to show the rate bulletin and your math. When amounts exceed $300 or the landlord retaliates, escalate to small-claims court. The judge can award the unpaid interest plus statutory penalties and court costs. Remember to file within three years of each missed annual payment to stay inside the statute of limitations for contract actions.
Below are two wording snippets you can adapt. Copy, paste, and personalize:
“Hi [Landlord Name], According to [City] Rent Ordinance §__, my deposit earned 2025 interest of $____. Please credit this amount to my February rent or issue a separate payment by [Date]. Thank you.”
“This is a formal request for payment of $____ in accrued interest on my security deposit pursuant to [City] rate bulletin 2025. Please remit within seven (7) days or I will pursue remedies available under the ordinance and California Civil Code §1950.5.”