Basis Points - 1/100 %. Basis points are a useful term when comparing 2 percetages. The difference between 4.75% and 5% is not .25% but that is what people often state. It is 25 basis points. Lets look at 4% and 5%. They are 100 basis points different. But to subtract 4% from 5% and say they are 1% different is not accurate. 1% of 5% is .05% or .0005 (.01 * .05).
Related Terms