Alberta Security Deposit Interest Rates: What’s Changing in 2025 and 2026

When you collect a security deposit in Alberta, you’re not just holding funds—you’re holding them in trust. Under the Residential Tenancies Act and the Security Deposit Interest Rate Regulation, landlords must pay interest on those deposits every year, based on a rate set by the province. This applies to nearly all residential tenancies in Alberta.

Why Interest Is Required

A security deposit—often called a damage deposit—can be no more than one month’s rent. It protects landlords against unpaid rent or damages, but because the landlord holds the tenant’s money, Alberta law requires interest to be paid so tenants are not financially disadvantaged.

Landlords must also deposit security funds into an interest-bearing trust account within two banking days of receiving them.

Interest Rates for 2024, 2025, and 2026

2024: 1.6%

This was the first year since 2009 that landlords were again required to pay interest on security deposits.

2025: 0.5%

For January 1 to December 31, 2025, the prescribed security deposit interest rate is 0.5%.

This means:

• A $1,000 security deposit held for the full year earns $5.00 in interest.
• Interest must be paid annually, unless both parties agree in writing that it will be compounded and paid at the end of the tenancy.

The 0.5% rate represented a continuation of the renewed interest requirement that resumed in 2024.

2026: 0%

Effective January 1 to December 31, 2026, the interest rate drops back down to 0%.

This means:

• For deposits held entirely within 2026, no minimum interest is payable.
• If deposits span earlier years when interest applied (e.g., 2024 or 2025), the interest from those years is still owed.

How Alberta Sets the Yearly Interest Rate

The annual rate is calculated using a formula in the Security Deposit Interest Rate Regulation:

Interest rate = ATB Financial’s one-year cashable GIC rate on November 1 (of the previous year) minus 3%

If the result is below zero, the prescribed rate becomes 0%.

This formula explains the recent fluctuation:

• 2009–2023: 0% (rate formula produced zero or negative values)
• 2024: 1.6%
• 2025: 0.5%
• 2026: 0%

Rules for Paying Interest

Landlords must pay interest:

• Every 12 months,
• OR at the end of the tenancy, if both parties agree in writing to compound interest yearly.

A landlord may agree to a higher interest rate in the lease. If so, they are legally obligated to honor that higher rate (including compounding interest).

What Landlords Need to Do to Stay Compliant

✔ Deposit the security deposit into an interest-bearing trust account within 2 banking days.
✔ Track the annual prescribed rate and calculate interest accurately.
✔ Pay interest on time—annually or at the end of the tenancy (if agreed in writing).
✔ Use the Government of Alberta’s interest calculator for accuracy.
✔ Clarify interest expectations in the lease to prevent disputes.

While the actual amounts of interest are often small, especially in low-rate years, compliance is essential and can prevent disagreements or RTDRS claims at the end of a tenancy.

Why This Matters

Security deposit interest is easy to overlook, but it’s a legal requirement that supports fairness and transparency. Staying informed about changing interest rates ensures that landlords meet their obligations and tenants receive what they’re owed—helping to avoid disputes and keeping tenancies running smoothly.