Basis Point Calculator

Basis points (bp) are a unit of measurement commonly used in finance to describe small percentages. One basis point equals 0.01% (1/100th of a percent). For example, 100 basis points = 1%, 50 basis points = 0.5%, and 1 basis point = 0.01%. Basis points are frequently used to describe interest rate changes, bond yields, and other financial ratios.

To convert percentage to basis points, multiply the percentage by 100. For example, 1.5% = 1.5 × 100 = 150 basis points. Conversely, to convert basis points to percentage, divide by 100: 150 basis points = 150 ÷ 100 = 1.5%.

Basis points (bp) and permille (‰) are both units for expressing small percentages, but they use different scales. One basis point = 0.01% (1/100th of a percent), while one permille = 0.1% (1/10th of a percent). So 1 permille = 10 basis points. For example, 1.5% = 150 basis points = 15 permille.

Basis points are widely used in finance for: interest rate changes (e.g., 'The Fed raised rates by 25 basis points'), bond yields, credit spreads, investment fees, and other financial ratios where precision is important. They're preferred over percentages when dealing with small changes because they avoid decimal points (e.g., '25 bp' vs '0.25%').

To convert a decimal value to basis points, multiply by 10,000. For example, 0.015 (decimal) = 0.015 × 10,000 = 150 basis points. This works because 0.015 as a decimal represents 1.5%, and 1.5% = 150 basis points.

Common conversions include: 1% = 100 bp, 0.5% = 50 bp, 0.25% = 25 bp, 0.1% = 10 bp, 0.01% = 1 bp. For larger values: 5% = 500 bp, 10% = 1,000 bp. These conversions are essential for understanding interest rate changes, bond yields, and financial spreads.

Basis points are preferred in finance for several reasons: they avoid decimal points when discussing small changes (e.g., '25 bp' vs '0.25%'), they're more precise for small movements, they're the standard unit in financial markets, and they reduce confusion when dealing with very small percentage changes.

To calculate basis points for an interest rate spread, subtract the lower rate from the higher rate and convert to basis points. For example, if a corporate bond yields 5.25% and a Treasury bond yields 3.00%, the spread is 5.25% - 3.00% = 2.25% = 225 basis points.