Basis Points: bps Meaning and Formatting
A basis point is one hundredth of a percentage point, making 100 basis points equal to 1 percentage point. The abbreviation “bps” is common in finance, but its exact typographic treatment can follow house style.
1 basis point = 0.01 percentage point; 100 bps = 1 percentage point. Define “bps” when the audience may not know it.
Key details
Important caveats
Usage Boundary
Use basis points for differences in rates or percentages when that unit improves precision; do not confuse a basis-point change with the same-size relative percent change.
Further guidance
Formatting
“bps” is widely used as an abbreviation in financial contexts, but capitalization, spacing, and first-use definition should follow the publication or organization’s style.
Meaning
One basis point equals 0.01 percentage point, so 100 basis points equal 1 percentage point.
Practical Application
Use basis points when comparing rates or percentages and the hundredth-of-a-percentage-point unit improves precision. Define “bps” on first use for general audiences and follow house style for spacing/capitalization.
Reader Check
Are you reporting an absolute percentage-point change rather than a relative percent change? Convert carefully before choosing basis points.
Worked Example
A rate rising from 4.00% to 4.25% increases by 25 basis points (0.25 percentage point), not by “25%.”
Sources and evidence
Sources are shown with the role they play in this guide. Historical or style-sensitive claims are kept within the evidence boundary described above.
- Federal Open Market Committee — basis points definition (opens in a new tab)Board of Governors of the Federal Reserve System · Defines one basis point as one hundredth of a percentage point