Interest on security deposits paid to landlords, in Michigan?
NO.  The legislation requires the landlord to deposit it in a bank.  Check out pages 7-10 of the linked document.  There is no mention of interest. The second clause, I believe, is probably for large landlords who hold hundreds of thousands of dollars of security.   http://www.legislature.mi.gov/documents/publications/tenantlandlord.pdf Q4 Once collected, what must the landlord do with the security deposit?   The landlord must either: a) Deposit the money with a regulated financial institution (e.g.,   bank), OR b) Deposit a cash bond or surety bond, to secure the entire deposit,   with the Secretary of State. ( Note: If the landlord does this, he or   she may use the money at any time, for any purpose.) The bond ensures   that there is money available to repay the tenant’s security deposit "No. The full text of the Landlord-Tenant Act (specifically, section 554.614 of Act 348 of the year 1972) makes no mention of this. Searching the law for ""interest"" doesn't yield anything of interest (pardon the pun).  Specifically, section 554.604 of the same law states that: (1) The security deposit shall be deposited in a regulated financial   institution. A landlord may use the moneys so deposited for any   purposes he desires if he deposits with the secretary of state a cash   bond or surety bond written by a surety company licensed to do   business in this state and acceptable to the attorney general to   secure the entire deposits up to $50,000.00 and 25% of any amount   exceeding $50,000.00. The attorney general may find a bond   unacceptable based only upon reasonable criteria relating to the   sufficiency of the bond, and shall notify the landlord in writing of   his reasons for the unacceptability of the bond. (2) The bond shall be for the benefit of persons making security   deposits with the landlord. A person for whose benefit the bond is   written or his legal representative may bring an action in the   district, common pleas or municipal court where the landlord resides   or does business for collection on the bond. While it does sound like the landlord is required to deposit the money in a bank or other secured form, e.g. the Secretary of State, he/she isn't required to place it in an account that will earn interest."
Could someone please explain to me how interest rates work? I like to think of interest rates as the price of money. It is specified as a percentage paid per unit of time (for example, 3%/year). To figure out how much interest money you get (or have to pay) for a given amount and time, multiply the amount with the interest rate and then divide by the time divided by the interest rate's specified time. That sounds awfully complicated, so let's look at a simple example instead. You deposit $1,000 at a fixed interest rate of 2% per year, for two and a half years, where the interest is paid at the end of the term. This means that you earn $1,000 * 2% = $20 per year in interest. Multiply this by [2.5 years] / [year] = 2.5, and you will have received $20 * 2.5 = $50 in interest over 2.5 years. If the interest is paid yearly, this gets slightly more complicated, but the principle is the same. Now imagine that you deposit $5,000 at a fixed 3% per year, for half a year. Again, the interest is paid at the end of the term. You now earn $5,000 * 3% [per year] * [[0.5 years] / [year]] = $75 in interest over six months. Variable interest rates makes this a little more complicated, but it is exactly the same thing in principle: calculate the interest paid for each period (taking any compounding into account), then add up all periods to get the total amount of interest paid over time. It also works the same way if you take out a loan rather than depositing money. Tax effects (capitals gains taxes or interest expense deductions) may make the actual amount paid or received different, but that does not change the fundamental aspect of how to calculate interest. Do CD's make more money with higher interest rates, or is it the other way around? Usually fixed interest rate instruments such as certificates of deposit, or loans with fixed rates, pay a higher interest rate for longer terms. This is because it is harder to judge credit risk in a longer term, so whoever gives the loan usually wants a premium for the additional risk. So a 6-month CD will normally pay a smaller percentage interest per year than a five-year CD. Note that this is not always the case; the technical term for when this does not hold is inverted yield curve. Interest rates are almost always formally specified in terms of percent per year, which makes it easy to compare rates. If you buy a $100 6-month CD paying 1% (I told you these were only examples :)) and then reinvest the money at the end of the term in another 6-month CD also paying 1%, the total amount paid will be ($100 * 1 + (1% * 6/12)) = $100.50 for the first term, then ($100.50 * 1 + (1% * 6/12)) = $101.0025 at the end of the second term. As you can see, the compounding of the interest makes this return slightly more than a single $100 12-month CD ($100 * 1 + 1% = $101), but unless you are dealing with large amounts of money, the difference is small enough to be negligible. If you were to put $100 in a 2% one-year CD, you'd get back $102 at the end of the year. Put the same amount in a 5% one-year CD, and you get back $105. So yes, higher interest rates means more interest money paid, for loans as well as deposits. Keep in mind that loans and deposits really are essentially the same thing, and interest calculations work the same way for both. The interest rate of a normal certificate of deposit does not change if the variable interest rates change, but rather is locked in when the money is deposited (or the CD is bought, whichever way you prefer to look at it). Firstly, how far behind on rent are they? Have you sent them notices in writing about late rent, and if so how many have you had to send? How often do they say they are going to do things (like pay overdue rent) and they never do? To tell you the truth IMHO, if they are starting to be regularly late in rent payments and they don't do things they say they are going to do - then it is time to evict them. In NSW Australia, if the tenant is more than 2 weeks late in rent, and prior to them reaching 2 weeks late you have called them asking for late rent and sent notices, you can evict the tenants. If the tenants do not leave you can apply to the Tribunal to get them out and ask for outstanding money to be paid to you. However, if it does get to this stage, the tenants may be pissed off so may do some damage to the property in retaliation. Then you have to go back to the Tribunal to get the Tenant's Bond (Security Deposit) and any other funds to repair any damages done to your place. The longer you leave it the worse it will get. We had some tenants similar to this which we finally got out earlier this year. They would say they would pay rent due by the end of the week and no money would come by the end of the week. We took them to Tribunal and got them out, and we got the Bond plus unpaid rent and other money for damages and leaving the place dirty (over and above the Bond) awarded to us - just under $4K.  The tenants said they couldn't pay and so went on a payment plan to pay about $135 every 2 weeks. They didn't pay any of the payments, so then we went to the local court to get a sheriff to go to their new place and take their property. The must have gotten scared from this because they approached the local court and agreed to pay $60 per week. We have currently received about 10 payments so it will be a long time before we get all our money back. As I said the longer you leave it the worse it can get. You should also look at improving your criteria for selecting new tenants. I have given an answer to this question How to choose a good tenant as a private landlord? Hopefully it can give you some ideas of what to ask for when searching for your next tenant. Update due update in Question Six weeks behind in rent is quite a bit to be behind. If the landlord had been asking the tenant to pay the late rent during this period and the tenant had been giving excuses why the rent was late and saying they would pay it by a certain time but never did - it is a big sign that they will tell you lies.  If this is the first time they have been late in paying rent and now they are back up to date with the rent, you might want to give them one more chance. If this is a pattern that happens regularly it is better to get them out, as it will happen again, you will get in an argument with them and then they might stop paying rent altogether. You can usually gain a better perspective of the tenants from their action rather than their words - that is why ascertaining their past rental history is so important when finding a new tenant. "As is so often the case, there is an asterisk next to that 2.5% interest offer.  It leads you to a footnote which says: Savings Interest Rate Offer of 2.5% is available between January 1, 2015 and March 31, 2015 on all net new deposits made between January 1, 2015 and March 31, 2015 to a maximum of $250,000.00 per Account registration. You only earn 2.5% interest on deposits made during those three months.  Also, on the full offer info page, it says: During the Offer Period, the Bank will calculate Additional Interest on eligible net new deposits and: All interest payments are ineligible for the purposes of calculating Additional Interest and will not be calculated for the purposes of determining eligible daily balances. In other words, any interest paid into an Applicable Account, including Additional Interest, will not be treated as a new deposit for subsequently calculating Additional Interest payments. I couldn't totally parse out all the details of the offer from their legalese, but what it sounds like is you will earn 2.5% interest on money that you deposit into the account during those three months.  Any interest you accrue during that time will not count as a deposit in this sense, and so will not earn 2.5% compounded returns.  The ""During the Offer Period"" qualification also makes it sound like this extra interest will only be paid during the three months (presumably at a 2.5% annualized rate, but I can't see where it actually says this). So essentially you are getting a one-time bonus for making deposits during a specific three-month period.  The account doesn't really earn 2.5% interest in the normal sense.  The long-term interest rate will be what it normally is for their savings accounts, which this page says is 1.05%." "To the best of my knowledge, in California there's no such thing as registering a place as a business. There's zoning (residential/commercial/mixed/etc), and there's ""a business registered at a place"". But there's no ""place registered as a business"". So you better clarify what it is that you think your landlord did. It may be that the place is used for short term rentals, in which case the landlord may have to have registered a business of short term rentals there, depending on the local municipal or county rules. Specifically regarding the deposit, however, there's a very clear treatment in the California law. The landlord must provide itemized receipt for the amounts out of the deposit that were used, and the prices should be reasonable and based on the actual charges by the actual vendors. If you didn't get such a receipt, or the amounts are bogus and unsubstantiated - you have protection under the CA law." "The fundamental question I'd have to ask here is - when will the interest you owe on the loan on your house be capitalized?  I think thats a fancy way of saying - how is your bank calculating the amount of interest on the loan? Is it based purely on the principal, or on the principal + existing interest?  Your situation is similar to that of having a student loan - it sounds like your loan is in deferment, but is equivalent to being ""unsubsidized"" - that is, you still are being charged interest on the loan. The question really boils down to - will you be paying interest on only the principal of the loan or both the principal and the interest of the loan?  Here are some helpful steps: If the interest is capitalized immediately, I believe it is correct to say it doesn't matter if you pay the principal or the interest of your loan first. If the interest is NOT capitalized until your deferment period is over, then its definitely best to pay off the principal first.  Hope this helps." So an investor would get their principal back in interest payments after 13.5 years if things remained stable, not accounting for discounting future cash flows/any return for the risk they are taking.  The long maturity helps insurance companies and pensions properly match the duration of their liabilities. Still doesn't seem like a good bet, but it makes sense that it happened. To be absolutely sure you should call the agent and check That said I have been renting accommodation through both agencies and directly through landlords for seven years (I live in London) and this is quite a common situation. It normally means that the deposit is being securely held by a third party so that it cannot be taken or depleted without the agreement of both parties. The deposit protection scheme ( https://www.depositprotection.com/ ) is one way that deposits are securely held in this manner. As a third party they will have different account details. It may be the case that the agency is protecting the deposit and you are paying rent to the landlord directly. This means that your deposit goes to the agency's account and the rent goes to the landlord's account. Obviously your landlord and agency have different accounts. A little colour to brighten your day: I am currently paying my rent to the agency who also took the deposit but, because of the way they handle deposits versus rent, the deposit was sent to a different account held by the same agent. In my previous flat I paid the deposit to an agency and the rent directly to the landlord. This resulted in an issue one time where I got the two accounts confused and paid rent to the agency who, after giving me a small slap on the wrist, transferred it to my landlord. In the flat before that I paid rent and the deposit to my landlords' holding company. That is one of the few times that I paid rent and the deposit into the same account. Again check with the agent that one of these situations is the case but this is absolutely normal when renting through an agency. "The first loan looks like it did not have its interest subsidized while you were in school, so interest was accruing eventhough you didn't have to start making payments on it yet. With the $73 payment you made, the bank is allocating the funds in a pre-determined split that is in their best interest - NOT yours! While you do need to pay them down (and eventually off), at the current rate it will take ~169 months (with no more interest accruing) to do so. Most likely, with interest continuing to accrue, you're looking more in the neighborhood of 17 years, rather than 14 (these are back-of-the-envelope numbers). The payoff balance listed is the current principle plus interest that will accrue before the next processing date - so it is usually a little higher than the ""actual"" balance, because the interest is accruing daily (albeit in very small percentages (1/365 of the loan's percentage))."