Connecticut Security Deposit Interest Rate 2026: 0.49%

4. The deposit amount this interest applies to

Connecticut caps how much a landlord can collect as a security deposit in the first place: two months' rent for most tenants, reduced to one month's rent for a tenant who is 62 years of age or older. The interest rate applies to whatever amount is actually being held within those limits.

[Cite: Connecticut General Statutes section 47a-21]

5. The deposit return deadline, precisely stated

At the end of a tenancy, a landlord, other than a rent receiver, has to deliver to the tenant or former tenant, at their forwarding address, either the full security deposit plus accrued interest, or written notice of the damages being claimed against it, within thirty days after the tenancy terminates. If the tenant hasn't provided a forwarding address by that point, the landlord instead has fifteen days after receiving written notice of that address, whichever of the two deadlines comes later.

[Cite: Connecticut General Statutes section 47a-21]

This is worth stating precisely because it's easy to find sources online quoting a shorter, 21-day window instead. The statutory text itself is clear that the deadline is thirty days, or the later fifteen-day window tied to the forwarding address.

6. The penalty structure has an important distinction most sources miss

A landlord who violates the deposit-return requirements generally is liable for twice the amount or value of the security deposit paid. But the statute specifically carves out a narrower consequence for one particular kind of violation: if the violation is specifically the failure to deliver the accrued interest, rather than the deposit itself, the landlord is liable for only twice the amount of that accrued interest, not twice the whole deposit.

[Cite: Connecticut General Statutes section 47a-21]

That's a meaningful distinction in practice. A landlord who returns the principal deposit correctly and on time, but miscalculates or omits the interest, faces a much smaller doubled-damages exposure than a landlord who fails to return the deposit itself or misses the deadline entirely.

7. The same index governs other kinds of deposits too

The Banking Commissioner's annual deposit index isn't used only for rental security deposits. It also sets the floor for mortgage escrow account interest, currently 0.5% for 2026, which must be at least the deposit index rounded to the nearest tenth of a percent, and it factors into utility and certified telecommunications provider customer deposits, where the applicable rate is 1.5% or the deposit index, whichever is higher.

[Cite: Connecticut Department of Banking, 2026 Deposit Index announcement]

A property manager who also handles mortgage escrow accounts, or a utility provider tracking customer deposits, needs to apply the correct rate for each specific account type rather than assuming the rental security deposit figure of 0.49% applies uniformly across all of these.

8. A practical example of the calculation

Take a tenant paying a $2,000 deposit who reaches their tenancy anniversary sometime in 2026. At 0.49%, the annual interest owed on that deposit is $9.80. That's the amount the landlord either pays directly or credits toward the tenant's next month's rent on that anniversary date. For a tenant who's held the same lease across several years, each year's interest is calculated separately using that year's specific rate, so a deposit held since 2022 would have earned interest at 0.06% for that year, then the higher rates that followed in subsequent years, rather than 0.49% applied retroactively across the whole period.

[Cite: Connecticut Department of Banking, historical deposit index table]

9. What property managers should update for 2026

The practical task is straightforward but easy to overlook if it's not built into an annual calendar: any tenancy anniversary date falling in 2026 needs the interest calculation updated to 0.49%, replacing whatever rate was used the prior year. A landlord managing multiple leases with staggered anniversary dates throughout the year needs a system that applies the correct calendar-year rate to each tenancy's specific anniversary, rather than a single annual batch calculation using one rate for every lease regardless of when each one actually started.

Given the reduced penalty specifically tied to interest-only failures described above, getting this calculation right still matters, both for compliance and because it's a small, mechanical task that's straightforward to automate correctly once the current rate is confirmed.