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## Basis point

The basis (BSP) point is a unit of measure of percentages and refers to 1/100th of 1.00%. In other words, if you divide one percent by a hundred, you will get one basis point.

Basis points are, usually, used when talking about interest rates. Such concept allows avoiding ambiguity when speaking about percentages.

For instance, if you say “10% interest increased by 5%”, would that mean that the total interest is 15% or 10.5%? In basis points terms, the 15% would indicate an increase by 500 bps, and 10.5% would be only 50 bps increase.

Basis points | Percentage |

1 | 0.01% |

10 | 0.1% |

50 | 0.5% |

100 | 1.0% |

1,000 | 10% |

10,000 | 100% |