Does the deposit have to be in an interest-bearing account in North Carolina?

No statute addresses whether the account must bear interest. Security deposits from tenants in residential dwelling units "shall be deposited in a trust account with a licensed and federally insured depository institution or a trust institution authorized to do business in this State, or the landlord may, at the landlord's option, furnish a bond from an insurance company licensed to do business in North Carolina" (§ 42-50). A trust account outside North Carolina is permitted only if the landlord provides the tenant with an adequate bond in the amount of the deposits.

What happens if a landlord does not pay deposit interest in North Carolina?

No penalty reaches deposit interest, because no interest is owed. The custody duty is enforced through § 42-55: "The willful failure of a landlord to comply with the deposit, bond, or notice requirements of this Article shall void the landlord's right to retain any portion of the tenant's security deposit."

Does a landlord have to pay interest on a security deposit in North Carolina?

Verified August 28, 2026 All North Carolina topics →

Legislative changes ahead — not yet in force. This page reflects the law in force today. The following measure would change North Carolina's landlord-tenant law:

H990 (2025-2026 session) — Would rewrite G.S. 42-46 to require landlords to give tenants written notice (hand delivery, mail, or electronic per the lease) before collecting a late fee, stating the amount and date imposed, no earlier than five days after the due date. Caps unchanged. Status: Introduced 2025-04-10; referred to House Rules, Calendar, and Operations 2025-04-14; no further action — not enacted. CAUTION: at least one landlord-facing website reports this notice requirement as effective 2025-10-01; that is wrong (the 2025-10-01 effective date belongs to SL 2025-52's separate amendment of 42-46(i)). (checked July 8, 2026).

What did not become law. None of the following is law; failed bills are sometimes still described as if enacted:

House Bill 377 (2025-2026), 2026 Court Changes — Would rewrite N.C.G.S. § 42-34.1, on rent owed while a possession judgment is executed and on the bond required to stay execution pending appeal. A tenant who already filed an undertaking on appeal from the magistrate, and who keeps making the periodic rent payments that undertaking requires after the district court judgment, would satisfy the bond requirement by those continued payments and keep the stay, both during the thirty days for taking an appeal and during the appeal itself. It would apply to actions pending on and filed after the date it became law. No notice period, court deadline or writ figure on this page would change. Status: Ratified August 6, 2026; presented to the Governor August 7, 2026; vetoed August 17, 2026. The House placed the veto message on its calendar for September 2, 2026, and as of September 5, 2026 the bill's official history records no override vote in either chamber. It is not law. (checked September 5, 2026).

North Carolina does not require landlords to pay tenants interest on a security deposit, and the Tenant Security Deposit Act never uses the word in a money sense.

Cited to N.C. Gen. Stat. § 42-50 (deposits from the tenant — trust account or bond; 30-day notice) and 2 more cited sources · Verified August 28, 2026

It does require custody, with a choice: the deposit goes into a trust account at a licensed and federally insured depository institution or a trust institution authorized to do business in the state, or the landlord may instead furnish a bond from an insurance company licensed in North Carolina (§ 42-50). A trust account held outside the state is allowed only if the landlord gives the tenant an adequate bond for the amount of the deposits, and within 30 days after the lease term begins the tenant must be told the bank's name and address or the bonding insurer's name. The act names the type of institution but attaches no yield condition to the account, and a landlord who takes the bond route holds no separate fund at all — which leaves nothing for an interest duty to attach to.

North Carolina deposit interest at a glance

Interest owed to the tenant	No — no statute addresses it
How the rate is set	No rate exists — there is no interest duty
Current figure	No published figure exists
Rate rules	No rate rules — no duty exists
Accrual and payment	No payment duty exists
Who and what is covered	No statutory conditions stated — see the summary and notes
Statute controls where or how the deposit is held	Yes
Interest-bearing account required	No statute addresses whether the account must bear interest
Custody rules	Security deposits from tenants in residential dwelling units "shall be deposited in a trust account with a licensed and federally insured depository institution or a trust institution authorized to do business in this State, or the landlord may, at the landlord's option, furnish a bond from an insurance company licensed to do business in North Carolina" (§ 42-50). A trust account outside North Carolina is permitted only if the landlord provides the tenant with an adequate bond in the amount of the deposits. Within 30 days after the beginning of the lease term the landlord or the landlord's agent must notify the tenant of the name and address of the bank or institution where the deposit is currently located, or the name of the insurance company providing the bond. The statute names the kind of institution and attaches no condition to what the account earns; a landlord who elects the bond route holds no segregated fund at all. The article applies to all persons, firms or corporations engaged in the business of renting or managing residential dwelling units, excluding single rooms, on a weekly, monthly or annual basis (§ 42-56).
Penalty for violation	No penalty reaches deposit interest, because no interest is owed. The custody duty is enforced through § 42-55: "The willful failure of a landlord to comply with the deposit, bond, or notice requirements of this Article shall void the landlord's right to retain any portion of the tenant's security deposit." The tenant may bring a civil action to require an accounting and recover the balance, may recover damages resulting from the landlord's noncompliance, and may be awarded attorney's fees where the court finds willful noncompliance, which the section declares to be against the public policy of the State. Note that the bond and notice duties sit inside that voiding trigger alongside the deposit duty.
Local rules	None noted for this state

Cite this page: "Landlord Atlas, North Carolina Security Deposit Interest Laws (verified August 28, 2026), landlordatlas.com/laws/deposit-interest/north-carolina/" — free to cite and quote with a link (how these records are verified). Everything above is cited in the citations section below.

Check the verified North Carolina answer — and every state and city that differs — in the deposit interest calculator — free, no signup, built on the same verified North Carolina law as this page.

Notes and caveats

The custody rule, in one sentence of statute — Section 42-50 is a single paragraph. It requires the trust account or the bond, permits an out-of-state trust account only against an adequate bond in the amount of the deposits, and imposes the 30-day notice of the bank's name and address or the insurer's name. That is the whole of North Carolina's deposit-custody law, and it contains no account-yield term.
The bond branch matters for the interest question — Because the landlord may choose a bond instead of a trust account, a compliant North Carolina landlord may hold no segregated deposit fund at all. An implied duty to pay over account earnings is textually impossible on that branch, which is one reason the silence in the act reads as deliberate rather than accidental.
Enforcement reaches the notice duty too — The voiding sanction in § 42-55 is triggered by willful failure to comply with the deposit, bond or notice requirements. A landlord who holds the money correctly but never tells the tenant where it is has failed a requirement inside the same trigger.
Who the article covers — Section 42-56 applies the article to all persons, firms or corporations engaged in the business of renting or managing residential dwelling units, excluding single rooms, on a weekly, monthly or annual basis.
Currency — Section 42-50 carries the credit line 1977, c. 914, s. 1; 2015-93, s. 2; 2017-25, s. 2(a), so it was last substantively amended by Session Law 2017-25. Section 42-52 was last amended by Session Law 2009-279. Sections 42-57 and 42-58 are printed as reserved for future codification. No 2025 or 2026 change to article 6 is visible, and Senate Bill 518 of that session contains no deposit-interest content.

Common questions: North Carolina deposit interest

Each answer is the verified value from the table above, restated as a direct answer. Free to quote with a link to this page.

What is the North Carolina security deposit interest rate right now?: No published figure exists.
When must a landlord pay or credit deposit interest in North Carolina?: No payment duty exists.
Does the deposit have to be in an interest-bearing account in North Carolina?: No statute addresses whether the account must bear interest. Security deposits from tenants in residential dwelling units "shall be deposited in a trust account with a licensed and federally insured depository institution or a trust institution authorized to do business in this State, or the landlord may, at the landlord's option, furnish a bond from an insurance company licensed to do business in North Carolina" (§ 42-50). A trust account outside North Carolina is permitted only if the landlord provides the tenant with an adequate bond in the amount of the deposits.
What happens if a landlord does not pay deposit interest in North Carolina?: No penalty reaches deposit interest, because no interest is owed. The custody duty is enforced through § 42-55: "The willful failure of a landlord to comply with the deposit, bond, or notice requirements of this Article shall void the landlord's right to retain any portion of the tenant's security deposit."
Do any cities or counties in North Carolina have their own deposit-interest rules?: None noted for this state.

Citations

N.C. Gen. Stat. § 42-50 (deposits from the tenant — trust account or bond; 30-day notice) (verified 2026) Official source
N.C. Gen. Stat. § 42-55 (remedies) (verified 2026) Official source
N.C. Gen. Stat. §§ 42-50 to 42-56, Tenant Security Deposit Act (full article) (verified 2026) Official source

How this record was verified: Direct read of the complete Tenant Security Deposit Act, N.C. Gen. Stat. chapter 42, article 6 — §§ 42-50 through 42-56, with §§ 42-57 and 42-58 printed as reserved — in the General Assembly's published article text, with § 42-50 read as a single paragraph and every occurrence of "interest" in the article examined in context (four, all property-sense: the heading and text of § 42-54 and the successor clause of § 42-55), and "interest-bearing", "accrue" and "per annum" returning no occurrences; the bond branch of § 42-50 read specifically to confirm it creates no yield or accounting duty; and Senate Bill 518 of the 2025-2026 session read for any deposit-interest content, of which it contains none.