What is the formula for Basis Point?

Basis Point = 1 basis point = 0.01% = 0.0001 as a decimal

Can you give an example of Basis Point?

See the definition above for typical use cases of Basis Point in personal finance.

When does Basis Point apply?

Basis Point is used when working through banking decisions. The definition above describes the typical context.

What category does Basis Point fall under?

Basis Point is part of the banking category in the CalcFi glossary.

Which calculators use Basis Point?

Browse the CalcFi calculators hub for tools that incorporate Basis Point.

Where does the Basis Point definition come from?

Definitions in the CalcFi glossary are written by the CalcFi editorial team and cross-checked against IRS, Federal Reserve, BLS, and Investopedia conventions.

Is Basis Point the same as related terms?

Basis Point is closely related to other banking concepts. See the Related Terms section on this page for direct comparisons.

Does this glossary entry replace professional advice?

No. The CalcFi glossary is educational reference material. It is not personalized tax, legal, or investment advice. For decisions with material consequences, consult a licensed professional.

Definition

Basis Point

One one-hundredth of a percent (0.01%); used to express small percentage changes.

Written by Jere SalmistoReviewed by CalcFi EditorialLast verified: 2026-05-13

What Is Basis Point?

A basis point (often abbreviated as "bp" or "bps") is a unit equal to 0.01% or 1/100th of 1%. Basis points are commonly used in finance to express small percentage changes clearly. For example, "the Fed raised rates by 25 basis points" means rates increased by 0.25%, not 25%. When interest rates move from 3.5% to 3.75%, that's a 25-basis-point increase. Using basis points avoids confusion between percentage and percentage-point changes. Understanding basis points is important for tracking interest rate changes, fund fee comparisons, and yield changes.

Formula

1 basis point = 0.01% = 0.0001 as a decimal

Related Terms

Interest Rate

The cost of borrowing money or the return on savings, expressed as a percentage.

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