When you compare deposit offers from Armenian banks, you will see not only different interest rates but also different interest payment frequencies. Some products pay interest once a year; others every six months, every quarter, or every month. The frequency affects how much you actually earn because of compounding.
What is payment frequency?
Payment frequency is how often the bank calculates and credits interest to your account. "Annually" means once per year (e.g. at the end of the 12th month). "Quarterly" means four times per year; "monthly" means twelve times. When interest is credited, it usually becomes part of your balance for the next period, so you then earn interest on that larger balance—that is compound interest.
Why frequency changes your return
With the same annual rate, more frequent payment means more compounding. For example, 10% per year paid at the end of the year gives you one compounding step. The same 10% paid monthly means twelve smaller steps: each month you earn a bit of interest, it is added, and the next month you earn on the new balance. So by the end of the year, the total interest with monthly payment is slightly higher than with annual payment. The difference is usually modest for one year but grows over longer terms.
What to look for in a product
When choosing a deposit, check the contract for how often interest is paid and whether it is added to the balance (capitalized) or paid out to a separate account. If it is capitalized, more frequent payment means more compounding. Also consider your cash-flow needs: monthly interest might suit you if you want regular income, while annual payment might suit long-term growth. For the math behind it, see how Armenian banks calculate interest and compound interest explained for savers.
Product terms vary by bank; confirm the exact frequency and capitalization rules with your bank.