Basis Point Calculator
Convert between basis points and percentages. Calculate the impact of small interest rate changes on loans, investments, and fees.
Conversion Results
Rate Change Impact
Common Changes
25 bps: 0.25% - Typical Fed change
50 bps: 0.50% - Moderate rate change
100 bps: 1.00% - Full percentage point
200 bps: 2.00% - Significant change
Note: 100 bps = 1%
Understanding Basis Points
A basis point (often abbreviated as bp, bps, or bips) is a unit of measure used in finance to describe the percentage change in the value or rate of a financial instrument. One basis point is equivalent to 0.01% or 0.0001 in decimal form.
Basis Point Conversions
Conversion formulas:
Basis Points = Percentage × 100
Percentage = Basis Points ÷ 100
Why Use Basis Points?
- Precision: Allows for more precise measurements of small changes
- Standardization: Common unit across financial markets
- Comparability: Easy to compare changes of different magnitudes
- Professional Use: Standard terminology in finance and investing
Common Applications
- Interest Rates: Mortgage rates, bond yields, savings rates
- Investment Fees: Expense ratios, management fees, transaction costs
- Stock Performance: Small price movements, spreads
- Credit Spreads: Difference between risk-free and risky assets
- Exchange Rates: Currency fluctuation measurements
Examples of Basis Point Changes
| Change | Basis Points | Percentage | Example Impact |
|---|---|---|---|
| Quarter Point | 25 | 0.25% | Typical Fed rate change |
| Half Point | 50 | 0.50% | Moderate rate adjustment |
| Full Point | 100 | 1.00% | Major rate change |
| Two Points | 200 | 2.00% | Significant market move |
Impact on Different Amounts
The financial impact of basis point changes depends on the size of the amount being affected. Larger amounts show more significant dollar impacts from small percentage changes.
| Amount | 25 bps Change | 100 bps Change |
|---|---|---|
| $10,000 | $25 | $100 |
| $100,000 | $250 | $1,000 |
| $1,000,000 | $2,500 | $10,000 |
Basis Points in Different Contexts
- Mortgages: Interest rate changes affect monthly payments
- Bonds: Yield changes impact bond prices
- Stocks: Small price movements measured in basis points
- Fees: Management fees and expense ratios
- Currencies: Exchange rate fluctuations
- Credit: Credit spreads and risk premiums
Tip: Basis points provide a standardized way to discuss small percentage changes in finance. Understanding basis points helps you better comprehend interest rate changes, fee structures, and investment performance. Remember that 100 basis points equal 1 percentage point.