What does "accrued interest" refer to regarding security deposits?

Accrued interest refers specifically to the interest that accumulates on deposits held in interest-bearing accounts over time. In the context of security deposits, this means that when a landlord holds a tenant's security deposit in a bank account that earns interest, that interest is credited to the tenant. Depending on state laws, landlords may be required to pay this interest back to the tenant when the lease concludes and the security deposit is returned.

This concept ensures that tenants benefit from the time their money is held rather than losing potential earnings, reflecting the principle of good faith and fairness in rental agreements. It is important for tenants to understand their rights regarding accrued interest, as it can add value to the funds they have entrusted to a landlord.