Deposits in Armenia: Overview and Recommendations

What is a deposit and what is it for?

A deposit is a banking service that allows you to place funds in an account to earn interest, helping to accumulate and increase your finances.

How to choose a deposit and what to consider?

When selecting a deposit, it is important to consider several key factors:

• Currency of the deposit
• Interest rate
• Frequency of interest payments
• Capitalization of interest
• Deposit term
• Available features

When choosing the currency for your deposit in Armenia, keep in mind that deposits in the national currency generally offer higher interest rates and better conditions than deposits in foreign currencies. Armenian banks offer deposits in drams, dollars, euros, and rubles.

It may seem that a higher interest rate will yield more funds when closing the deposit, but many Armenian banks offering high rates also mention fees or limitations in other deposit features. Therefore, while the interest rate is important, it should not be the sole criterion for selecting the most profitable deposit.

The frequency of interest payments on your deposit is one of the criteria you can use to filter out options. Generally, interest payments can be made at the beginning of the term, monthly, quarterly, annually, or at the end of the deposit term. Armenian banks offer deposits with flexible interest payment options. However, be aware that other conditions, such as the interest rate, term, or minimum deposit amount, may depend on this choice.

In addition to the frequency of interest payments, pay attention to the possibility of interest capitalization. In other words, make sure that the interest earned in the previous month is added to the principal amount of your deposit.

The term of the deposit is also important, as banks in Armenia offer more favorable terms for long-term deposits than for short-term ones. Also, keep in mind that early withdrawal of the deposit may result in the loss of earned interest, so it is essential to carefully determine the deposit term and avoid premature closure.

Deposits have several main features that categorize them into different types. For example, some deposits offer options for replenishment or partial withdrawals. The most suitable option depends on the goal of your deposit. For a savings deposit, it is advisable to choose one that allows replenishment but does not permit partial withdrawals. Some banks in Armenia offer deposits with high interest rates but fewer flexible options, while others provide deposits with average interest rates but more flexible terms for deposits and withdrawals.

How to receive interest on your deposit?

When opening a deposit, you can choose the most convenient method for receiving interest:

• In cash at the bank branch
• Transfer to a bank card
• Transfer to a bank account

Keep in mind that some banks in Armenia do not allow you to change the interest payment method during the term of the deposit, so it is important to make a thoughtful choice.

What documents are required to open a deposit in Armenia?

Armenian banks offer deposits to both residents and non-residents. If you are a resident, you will need to provide your identification card and social security card to the bank.

If you are a non-resident, in addition to your identification, the bank may require a document confirming your income source, as well as registration or other documents.