The interest you earn on an Armenian bank deposit depends on the stated annual rate, how often the bank pays or compounds interest, and the term of the deposit. Banks apply formulas that follow standard financial mathematics; understanding them helps you compare products and use tools like the Saving.am calculator correctly.
Annual rate and compounding
Banks typically quote an annual interest rate (e.g. 10% per year). The actual growth of your balance depends on how often interest is calculated and added. When interest is paid annually, the bank calculates 10% on the balance at the end of the year and adds it. When it is paid quarterly or monthly, each period uses the same annual rate converted to a per-period rate, and each payment is added to the balance, so the next period earns interest on a larger amount—this is compound interest.
The formula in practice
For a fixed term deposit with no top-ups, the standard compound formula is: final balance = principal × (1 + r/n)^(n×t), where r is the annual rate (as a decimal), n is the number of interest payments per year (1, 2, 4, or 12), and t is the term in years. Banks in Armenia may use slight variations (e.g. exact day count), but the idea is the same: more frequent compounding usually means slightly higher total interest.
With monthly top-ups
Many savers add a fixed amount each month. In that case, the bank (and our calculator) applies the same rate and frequency to the growing balance and to each new contribution from the month it is made. The result is a combination of compound growth on the initial deposit and on the stream of contributions.
For exact terms and rounding rules, always refer to your bank’s contract and product conditions.