Convert basis points to percentages and calculate the dollar impact of rate changes.
A basis point (bp or bps) is one hundredth of a percentage point (0.01%). Financial professionals use basis points to express small rate changes precisely: "The Fed raised rates by 25 basis points" means a 0.25% increase.
| Basis Points | Percentage | Decimal |
|---|---|---|
| 1 bps | 0.01% | 0.0001 |
| 25 bps | 0.25% | 0.0025 |
| 50 bps | 0.50% | 0.0050 |
| 75 bps | 0.75% | 0.0075 |
| 100 bps | 1.00% | 0.0100 |
| 200 bps | 2.00% | 0.0200 |
On a $500,000 mortgage, a 25 bps rate change equals $1,250/year in interest. On a $1 billion bond portfolio, 1 basis point = $100,000/year. The larger the principal, the more each basis point matters.