Obligo Explains: Why Living Deposit-Free Is Financially Smart for Renters

Saving up for a security deposit is often a major financial hurdle for renters. The good news is, when you sign up for Obligo’s deposit-free living, that problem goes away. You now have the flexibility to use your money where it can generate the most value for you, whether that’s reducing debt, making an investment, saving up, furnishing your new apartment, or simply treating yourself.

Not having to pay a security deposit means you can free up cash that would otherwise be tied up for the duration of your lease. This gives you more flexibility to use your money in ways that make the most sense for your personal financial situation. 

Paying Off Debt

Paying off credit card debt is an obvious first choice, as credit cards always carry the highest interest rates. Even a small balance can quickly snowball into a larger debt burden. By using the money you save on a security deposit to pay off credit card debt, you can reduce the amount of interest you’ll pay over time and potentially pay off the debt faster. 

As of March 2023, the average credit card interest rate is 20.35%. Suppose you apply your $1800 security deposit savings toward paying off credit card debt, you’ll save an average of $366 on interest rate charges annually. 

As a bonus, paying off credit card debt will also help increase your credit score. Credit utilization ratio, or the percentage of your total credit limit that you’re using, is a major factor in determining your credit score. By paying off credit card debt, you can decrease your credit utilization ratio, which may improve your credit score over time. This can be especially beneficial if you’re planning to apply for a loan or credit card in the future.

While credit card debt carries higher interest rates, student loan interest charges can also add up over time. Using your deposit cash to pay off student loan debt will save you an average of $104 on interest rate charges annually.


If you don’t need to pay off debt, congrats! We’ve heard from many renters who use their cash savings to invest, with an average expected return of $180 annually.

Investing your money can be a smart way to grow your wealth over time. While there are risks involved with investing, it can be a good way to generate returns that exceed the rate of inflation and build long-term financial security.

The concept of “Time Value of Money” tells us that a dollar today is always worth more than a dollar tomorrow, or anytime in the future. With inflation and increasing interest rates today, the opportunity costs of having your cash tied up instead of investing it increases as well.

Saving Up & More

If you don’t have any pressing debts or investment opportunities, you may choose to use the money you save on a security deposit to build up your emergency savings, cover the costs of moving or furnishing your new apartment, or simply treat yourself to something special.

Whatever you choose to do with your savings, the flexibility that comes with living deposit-free can be a major advantage for renters looking to take control of their finances.

How Obligo Works

Obligo works similarly to a hotel check-in process. Using secure Open Banking data and AI, Obligo determines your eligibility to rent deposit-free.

If you qualify, you will then extend a Billing Authorization to one or more payment methods, allowing your property manager to charge you up to the security amount. 

Obligo is not an insurance product, and you will remain accountable for damages, missed rent or other obligations under the lease. If there are any such charges, you will be responsible for paying those amounts back to Obligo. We also offer installment plans for repayment!

When you move into your apartment, be sure to take photos to document any existing damage. When you move out, be sure to thoroughly clean, inspect and take photos of your apartment to avoid any charges! With Obligo, you maintain your right to dispute charges directly with your property or via a small claims court. 

Rest assured, Obligo only works with property owners and managers who treat their residents well. We review your property management company’s deposit charge histories to ensure they are in line with industry averages, and monitor move-out charges on an ongoing basis to protect against potential fraud or abuse. 

Obligo charges a small fee for our service, allowing you to keep your security deposit while still protecting your landlord. This fee covers the use of our deposit-free technology, including the qualification process and any payment service fees in the event of charges by your property manager. 

If you pay the Obligo deposit-free service fee, consider how the benefits may outweigh the cost for you. Using your deposit savings to pay off debt or invest can fully or partially offset the fee, while you enjoy a seamless rental experience powered by Obligo. No more trips to the bank to get certified checks, or waiting for your deposit refund via snail mail. Obligo lets you complete the deposit requirement in minutes, right from your phone. 

Interested in living deposit-free but haven’t received an Obligo invitation from your property manager? Email us their contact information and we’ll reach out to them!

Methodology to Calculate Savings: 

* Credit card debt payoff savings is based on the average median card APR of 20.35 percent as of March 9th, 2023.
* Student loan debt payoff savings is based on the average student loan interest rate of 5.8%.

*Investment returns are based on the average stock market return of 10% per year, as measured by the S&P 500 index over the last century.

Disclaimer: The information provided in this article is for educational and informational purposes only and should not be construed as professional financial advice. We encourage readers to seek the guidance of a licensed professional before making any financial decisions.

Leave a Reply

Your email address will not be published. Required fields are marked *

You Might Also Like