The process of landing the perfect apartment doesn’t end with signing a lease, paying the rent, and moving your belongings in. You also have to set up some or all of your utilities: electricity, gas, water, sewer, and TV/Internet. When you create a new account with utility companies, they may require you to pay a deposit upfront. As with security and pet deposits, utility deposits are meant to insure against losses that result from unpaid or underpaid bills.
Typically, if you live in a multi-unit building with a single meter, or if your landlord keeps bills for all utility services in their name, you will not need to set up utilities for yourself. All utility payments may be then included in your monthly rent or tacked on as a blanket fee.
Here’s what you need to know about utility deposits.
Utility deposits are refundable
If you pay your utility bills in full, you should expect to receive your entire deposit plus interest back after a set number of payments or when the agreement ends. However, if you miss payments or do not make payments on time, the deposit will be applied toward the discrepancy.
Utility deposits are (often) related to your credit
By letting you set up an account, utility companies are essentially issuing you credit, because you use the services before paying for them. Therefore, they prefer individuals with good credit history. If your credit is good, your utility deposit may be reduced or waived. If you have poor credit history, you will still be able to set up your utilities — but you may have to pay a higher deposit. Sometimes, utility companies may ask new customers to provide a “letter of guarantee,” a letter from a person who agrees to pay the bill if the customer fails to do so.
Your spouse’s credit history can also be an important factor when it comes to utility deposits. Utility companies cannot charge you a deposit amount if previous utility services were solely in your spouse’s name. However, if you benefited from those services or were living with your spouse at that time, they may consider your spouse’s utility payment history as yours too. If you reside in a community property state, even if you were not living together and sharing the utility account, your spouse’s credit history may be considered yours. Thus, a utility company may charge you a utility deposit based on your spouse’s poor credit and utility payment history. If you are able to successfully prove that you were unaware of any missed/delayed payments, or that you were not living with your spouse at that time, or that you took prompt action to make timely bill payments, utility companies may consider waiving the deposit.
Utility deposit amounts vary widely
As stated above, you may not need to pay a utility deposit at all. If a deposit is required, the amount could vary widely, as there are no strict regulations on what service providers and landlords can charge. For example, Duke Energy, which covers several states across the Southeast, says that the electricity deposit cost may range from $100 to $250 depending on the user’s projected monthly bill. Other utility companies require a blanket charge of $300 or more for residential electricity service agreements. If your cable or Internet provider requires a deposit, it may also cover equipment usage. Some utility companies will charge new customers a deposit amount that usually runs equal to the cost of a month’s service. In case of poor credit history, this amount may run much higher.
Ask questions and get it in writing
If you are denied utility service, or asked to pay a utility deposit, or asked to provide a letter of guarantee, you can ask the utility company to provide you a written explanation. As with all rental policies, learn your rights and be sure everything is documented in your service agreement, lease, or addenda. If your landlord is managing utility bills and participating in third-party billing — essentially dividing up total costs and then passing them on to tenants — make sure you understand how they are calculating what you owe. Keep track of all payments you make, and don’t be afraid to request proof of actual charges if you feel you are contributing too much.