What is a basis point (bps)?
A basis point is a unit used in finance to describe very small percentage changes. It helps avoid confusion when discussing rates, yields, fees, and spreads.
- 1 basis point (bps) = 0.01%
- 10 bps = 0.10%
- 100 bps = 1.00%
Professionals use basis points because saying “the rate increased by 50 bps” is more precise than saying “the rate increased by 0.5%,” which some people may misinterpret as a relative percentage change.
Bps to percentage formula
The conversion is straightforward:
Percentage = Basis Points ÷ 100
So, if you have 75 bps:
75 ÷ 100 = 0.75%
Common basis points to percentage conversions
| Basis Points (bps) | Percentage (%) | Decimal Rate |
|---|---|---|
| 1 | 0.01% | 0.0001 |
| 5 | 0.05% | 0.0005 |
| 10 | 0.10% | 0.0010 |
| 25 | 0.25% | 0.0025 |
| 50 | 0.50% | 0.0050 |
| 75 | 0.75% | 0.0075 |
| 100 | 1.00% | 0.0100 |
| 150 | 1.50% | 0.0150 |
| 200 | 2.00% | 0.0200 |
How to use this bps to percentage calculator
Step 1: Enter basis points
Type your basis points value in the first field. You can enter whole numbers or decimals.
Step 2: (Optional) Enter a current rate
If you want to see the updated rate after a change, enter your current percentage rate. The calculator will add or subtract the converted amount.
Step 3: Select decimal precision
Choose how many decimal places you want for the output.
Step 4: Click convert
You’ll instantly get:
- Basis points converted to percentage
- Equivalent decimal value
- Updated rate (if current rate is provided)
Where bps conversions are used
Interest rates
Central banks often raise or cut policy rates by 25 bps or 50 bps. Borrowing costs, savings rates, and mortgages may move as a result.
Bonds and fixed income
Bond yields are frequently quoted in bps. A treasury yield rising from 4.10% to 4.35% is a move of 25 bps.
Investment fees
Fund expense ratios and management fees are often discussed in basis points. For example, a 35 bps fee equals 0.35% annually.
Percentage points vs basis points
This is a common source of confusion:
- Percentage points are absolute changes in percent values (e.g., 4% to 5% is +1 percentage point).
- Basis points express the same absolute change with finer granularity (1 percentage point = 100 bps).
So a move from 3.25% to 3.75% is +0.50 percentage points, which is +50 bps.
Quick examples
- Mortgage rate increase of 30 bps = +0.30%
- Yield decline of 12.5 bps = -0.125%
- Fee cut of 8 bps = -0.08%
FAQ
How many bps are in 1%?
There are exactly 100 basis points in 1%.
Can basis points be negative?
Yes. A negative bps value indicates a decrease in the rate, yield, or fee.
Why not just use percentages?
Basis points reduce ambiguity and make small changes easier to communicate clearly in finance, banking, and investing.