What are Security Deposits? Everything Renters Should Know

What Is a Security Deposit?

A security deposit protects the landlord from financial loss should the tenant cause serious damage to the property or stop paying rent, forcing a time-consuming and sometimes expensive eviction process. The deposit is usually refundable, but some states, such as Nevada, dedicate a portion of the money to cleaning the unit after the tenant moves out. This money isn’t refundable under that state’s law.

Although one and a half months' rent is a rather standard amount, this can also depend on state law. Pennsylvania allows landlords to require two months' rent during the first year of the lease, but this decreases to one month if the tenant remains in residence for longer than a year. The landlord must return the excess to the tenant at this time.

  • Alternate name: Damage deposit

When am I required to pay my security deposit?

Tenants must pay their security deposit before moving in, just like they would for their first month’s rent. Many states make the property manager or landlord responsible for furnishing a checklist of payments and other disclosures they require before the move-in date.


What happens to the security deposit?

At the end of your lease, you’re entitled to getting all or some of your security deposit back—provided that you haven’t caused any damage to the property and have otherwise abided by the terms of your agreement, such as paying rent on time and satisfying community requirements. 

Depending on your rental agreement, you may be entitled to your security deposit as a cash or check payment. In other cases, your landlord may give you the option of putting your security deposit toward your last month’s rent. Just make sure you leave a forwarding address so that your property management organization knows where to send your money once you move.

If money is deducted from your deposit and you aren’t sure why, be sure to ask your rental company for an itemized list of expenses. In extreme cases when your security deposit is being withheld without cause, you may need to write a demand letter or even head to small claims court.

When Will I Get My Security Deposit Back?

You will get your security deposit back anywhere from 30 to 60 days after your lease is up and you’ve moved out of the apartment, depending on state laws. You will typically receive your security deposit back by mail in the form of a check, so be sure to notify your property manager or landlord of your new address to ensure a prompt delivery!

Can my landlord make deductions from my security deposit?

Remember, a security deposit is a measure to protect the property manager, not the tenant. There are certain circumstances under which your landlord can deduct from it. Here are the most common reasons a renter won’t get the security deposit back.

There’s significant damage

Wear and tear are normal and expected, which is why it’s the landlord’s job to fix or repair things like old appliances, worn-out carpeting and mold damage. However, if you gouge a hole in the drywall or generally damage the unit in an abnormal way, it’s your responsibility to pay for repairs, and the cost of such repairs will come out of your deposit. So, if you want to get your security deposit back, treat the rental unit gently.

In most states, though, there are provisions in place to protect the tenants from having unreasonable or unnecessary dollars taken from their deposit by the landlord. For example, in California, landlords can’t withhold security deposits to pay for things like painting or carpets unless they were totally wrecked by the renter.

The landlord is also prohibited from using a deposit to fund repairs for preexisting problems in an apartment. Don’t be afraid to ask for an itemized list of repairs if you suspect something dishonest is going on.

You owe unpaid rent or fees

If you have any late fees or unpaid apartment rent at the end of your term, your landlord can take that out of your security deposit. To avoid this, pay rent on time every month, and keep an eye on related bills, as well! Avoid overpaying, though. If you put down last months’ rent at the beginning, don’t forget and double down!

You broke the lease

Sometimes, a landlord can also deduct from your security deposit if you break the contract without providing adequate notice. So, avoid this unless it’s absolutely necessary. If you can’t get around it, give your landlord as much notice as possible. Everyone appreciates a thoughtful renter.

You left the unit in a mess

Not cleaning the unit before vacating is grounds for landlords to deduct from the security deposit. That’s why it’s always a good idea to make sure the apartment is tidy before moving out.

However, renters are only required to leave the unit as clean as it was when they first moved in, so that’s what you should aim for: that it’s clean enough to move in for the next tenants. Empty the refrigerator, wipe up any big spills and otherwise “broom clean” the place. Most landlords don’t expect it to pass the white glove test but want it tidy and relatively easy for professional cleaners to handle. Don’t lose a months’ rent because you were too lazy to straighten up!

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If my landlord or rental company refuses to give me my security deposit back, what do I do?

If you feel as though you are getting cheated out of good money and seriously have a good case on your hands, you might want to consider writing a demand letter. A demand letter is essentially a formal argument on why your security deposit should be returned. Most residents and rental companies can reach some sort of compromise this way. However, if things still can’t be negotiated and you have a lot of money at stake, it may be worth filing a lawsuit in small claims court. However, this process can be a major headache. So before you go filing a claim, make sure you’ve pursued all other alternatives.

When do I pay my security deposit and where does it go?

Just like your first month’s rent, you must pay your security deposit before you move in. Your landlord or property management company will most likely give you a checklist of payments before you move in and this will be one of them. Make sure you are punctual about getting your deposit in on time as it can affect whether or not you are able to secure the apartment.

As far as where your security deposit goes, property management companies are required to put your deposit in an interest-bearing account. For example, states like Massachusetts, Maryland, and New Jersey require that individual security deposits be placed in separate bank accounts and that residents are provided with a receipt that shows the bank where it is being held, along with the account’s annual interest rate. This is usually done within a month of your move-in. Regardless of where your security deposit is held, it cannot be spent unless appropriate circumstances arise, such as beyond your typical wear and tear.

How a Security Deposit Works

A security deposit is usually required to be paid before access to property or services is provided. So if you’re moving into a new apartment, for example, you may need to pay the security deposit in full when you sign the lease. Or if you’re heading off to college, a tuition deposit may be due before classes start.

Security deposits for rental agreements are typically covered by landlord-tenant laws at the state and/or local level. These laws can dictate:

  • How much a landlord is allowed to charge for a security deposit
  • When security deposits must be paid
  • Where this money must be held
  • Under what circumstances a security deposit can be returned and the time frame for doing so
  • When a landlord can keep a tenant's security deposit

For example, if you move out of an apartment and leave behind stained carpets or damaged fixtures, your landlord may be able to keep some or all of your security deposit to pay for cleaning and repairs. Or if you break the lease and move out early, you may forfeit your deposit to cover any remaining rent payments due.

Landlord-tenant laws can also specify what resources you have as a renter to reclaim your deposit. For instance, you may be able to file a civil lawsuit in small claims court if you believe your landlord is holding back your deposit unlawfully.

Your landlord may require a separate security deposit to cover any potential pet-related damage if you have pets.

Security deposits also can be used to recoup financial losses in other situations. If you stop paying your electric bill or cellphone bill, for example, your service provider can apply the deposit to your balance. Or if you rent a car or moving van and damage it, the security deposit may be used to pay for repairs.

How much can a landlord charge tenants for a security deposit?

Laws and regulations regarding how much landlords are allowed to charge for security deposits vary from state to state, so it’s a good idea to check the laws where you live if you have questions about what a landlord is charging. 

That said, many states, like New York, New Hampshire, and Massachusetts, security deposits are not allowed to exceed the amount of a month’s rent for the property in question. Other states like Missouri, Alaska, and Washington, D.C., allow landlords to charge up to two months’ worth of rent for a security deposit. In Connecticut, landlords may charge up to two months’ worth of rent for a security deposit unless the tenant is over 62 years of age.

And still other states—Colorado, Indiana, Iowa, and Florida, among others—don’t place any limits on landlords when it comes to security deposits. 

When do I pay my security deposit?

The entire security deposit is usually paid when you sign the lease. Often, they’ll also be paying for the first months’ rent, last months’ rent and any other related costs. Tenants pay security deposits by check, money order or electronic payment.

How To Upgrade to an Unsecured Card

A secured credit card can be a helpful tool when you’re building credit or trying to repair bad credit. But your goal should probably be to one day replace it with an unsecured credit card.

Improve your credit

The first step toward qualifying for more attractive credit card offers is to work on improving your credit scores. The credit improvement journey will look a little different for everyone. But here are a few basic steps that may help you.

  • Review your three credit reports for errors. You can dispute any credit errors you find (if applicable) with Equifax®, TransUnion®, and/or Experian™. You’re entitled to free credit reports from all three major credit bureaus once every 12 months. The easiest way to claim your free reports is to visit the official site, AnnualCreditReport.com.
  • Make your monthly payments on time each month. This rule applies not only to your secured credit card, but also to every other account on your credit reports. Late payments can have lingering, negative effects on your credit scores.
  • Practice responsible use of credit cards by not taking on more debt than your budget can handle. When you charge more on your credit cards than you can afford to pay off each month, it can raise your credit utilization rate and may damage your credit scores as a byproduct.

Ask (or wait) for an upgrade

Once your credit rating is in better shape, you might be ready to see if your card issuer will upgrade your secured credit card to an unsecured account. Some secured card issuers may consider your request if your credit scores are high enough and if you can satisfy other qualifying criteria (such as completing 12 months worth of on-time payment history on the account).

If your secured card issuer honors your request, it will likely refund your security deposit (minus any fees) at the time your account converts. You may receive the refund in the form of a check or a statement credit, depending on the terms of your credit card agreement.

Some card issuers, like Discover, will also proactively review your card account and credit history to see if you qualify for an upgrade, without any necessary action on your part.

Consider applying for a new credit card

If your creditworthiness has improved but your card issuer doesn’t offer the option to transition to an unsecured credit card account, you might want to consider a new unsecured card instead. 

You can shop around for the best credit card offers that suit your credit score range (limited credit, fair/average credit, good/excellent credit, etc.).

Take the time to compare rewards, signup bonuses, fees, interest rates, and other cardholder perks (like balance transfer options and introductory APR offers). Once you’ve chosen a favorite credit card that you believe you’re likely to qualify for, you can apply.

Note that even if you do qualify for a new unsecured credit card, you might want to keep your secured credit card open as well. This is especially true if the account doesn’t have an annual fee. You typically won’t be able to get your security deposit back as long as the account is open, but it may be worth the cost (and you may be able to reduce the amount of your deposit). Closing a credit card has the potential to damage your credit scores.

Special Considerations 

In some states, landlords might apply security deposits as rent from tenants who cannot otherwise pay or use the deposits to repair damage caused by tenants. Each state may stipulate whether or not a security deposit can be used to pay the final month’s rent when occupancy of a property comes to an end. Depending on local legislation, the final month’s rent and a security deposit might not be the same and must be accounted for separately. The landlord could even need written approval from the renter to use a security deposit as final rent.

There may be challenges to the amount required for security deposits in particular cities or neighborhoods. Some districts could have landlords who charge higher security deposit rates compared with surrounding areas. This can have the effect of forcing lower-income individuals and families from finding places to live in those areas. Local legislation might be enacted that sets limits on how large a security deposit may be in relation to the rent charged for a property.