Basis Points vs Percentage Points (Finance)

Definitions

A percentage point is the coarse step you get when you subtract two headline percents. A basis point is a finer step inside that same story: one hundredth of a point.

Both describe additive movement, not compounding growth, unless you explicitly add percent change.

Conversion table mindset

Memorize 100 bp equals 1 pp and derive the rest mentally. 25 bp is 0.25 points. 10 bp is 0.10 points.

When a headline mixes bp and percent signs, normalize before subtracting.

Step-by-step guide

1. Convert bp to points if either side is quoted in bp.
2. Subtract once both sides are in points.
3. Report the gap in whichever unit your style guide prefers for that asset class.
4. Double-check that percent change language is intentional.

For parallel reading on additive versus ratio language, open the percentage points versus percentage change explainer.

Worked example

A yield rises 15 bp from 4.10% to 4.25%. That is 0.15 percentage points on the headline scale. If you also publish the percentage point examples sheet for your beat reporters, they can sanity check similar sentences.

When you teach interns, pair this page with the what is a percentage point definition so vocabulary stacks in the right order.