A basis point is one hundredth of one percentage point: 0.01%, or 0.0001 written as a decimal. One hundred basis points make a full percentage point, so a rate that goes from 4.00% to 4.25% has risen 25 basis points. The unit exists to state the size of a rate change, or the gap between two rates, in a way nobody can misread. The Federal Reserve keeps its own record of policy moves in basis points, and the footnote to that table defines one as 1/100 percentage point. Rates and yields across the US Treasuries hub are discussed the same way.
How do you convert basis points to percent and dollars?
Divide basis points by 100 to get percentage points, or by 10,000 to get a decimal, then multiply the decimal by a balance to get dollars a year.
For a period shorter than a year, multiply the result by the number of days and divide by 365. On a $10,000 balance every basis point is worth exactly $1 a year, which makes $10,000 a handy yardstick:
| Basis points | Percentage points | Decimal | Per year on $10,000 |
|---|---|---|---|
| 1 | 0.01 | 0.0001 | $1 |
| 5 | 0.05 | 0.0005 | $5 |
| 10 | 0.10 | 0.0010 | $10 |
| 15 | 0.15 | 0.0015 | $15 |
| 25 | 0.25 | 0.0025 | $25 |
| 50 | 0.50 | 0.0050 | $50 |
| 100 | 1.00 | 0.0100 | $100 |
To go the other way, multiply percentage points by 100. On October 30, 2026 the 10-year Treasury par yield was 4.94% and the 3-month was 4.16%, a gap of 0.78 point, which a bond desk would call 78 basis points.
What does a 25 basis point move mean?
A 25 basis point move is a quarter of a percentage point, the size of the Federal Reserve's September 2026 rate increase.
On September 16, 2026 the Federal Open Market Committee said it would raise the federal funds target range by 1/4 percentage point to 3-3/4 to 4 percent, and the Fed's table of policy changes logs the same decision as an increase of 25. The range now stands at 3.75% to 4.00% (Federal Reserve Board, as of Oct 28, 2026), a band exactly 25 basis points wide. The rates around it are measured the same way: the Fed pays 3.90% on reserve balances, 15 basis points above the bottom of the range, and the New York Fed's effective federal funds rate printed at 3.88% on October 29, 2026, 13 basis points above it. The federal funds rate entry defines that benchmark, and how Fed rate decisions affect T-bill rates follows a quarter-point move into bill yields.
Worked example: A 25 basis point rise in a 13-week bill's yield
On October 30, 2026 the 13-week Treasury bill's investment yield was 4.08%. Suppose it rose to 4.33%.
- Change in percentage points: 4.33 − 4.08 = 0.25
- Change in basis points: 0.25 × 100 = 25 bp
- Change relative to the old yield: 0.25 ÷ 4.08 = 6.1%
- Interest on $10,000 for 91 days at 4.08%: $10,000 × 0.0408 × 91 ÷ 365 = $101.72
- Interest at 4.33%: $10,000 × 0.0433 × 91 ÷ 365 = $107.95
- Extra interest: $6.23 per bill, or $25 over a full year at the higher yield
The same quarter point sounds large as a share of the old yield and small in dollars, and that gap is exactly what basis points are meant to close. The Treasury bill calculator prices a bill of any term at any rate you enter.
How much does a 15 basis point fee cost?
A 15 basis point annual fee costs $15 a year on $10,000, because 0.15% of $10,000 is $15.
Worked example: A 15 basis point fee on $10,000
- 15 bp = 0.15% = 0.0015
- Annual cost: $10,000 × 0.0015 = $15, and $150 on $100,000
- Cost over one 91-day bill: $10,000 × 0.0015 × 91 ÷ 365 = $3.74
- Share of that bill's interest at 4.08%: 15 ÷ 408 = 3.7%, leaving a net yield of 3.93%
Fees of this size turn up as fund expense ratios (a ratio of 0.15% is 15 basis points; see expense ratio and index funds explained) and as currency markups, where a provider converts at a rate 15 basis points worse than the mid-market rate and keeps $15 of every $10,000. Check how often the charge applies. A currency markup is taken once per conversion, while an expense ratio comes out of the fund's assets every year you hold it. Exchange rate markups shows how to find the markup in a quote, and the currency converter shows the mid-market rate to measure it against.
Where do you see basis points?
You meet basis points wherever small rate differences matter: Fed decisions, Treasury auction results, daily yield changes, yield spreads, fund fees and currency markups.
- Treasury auctions. Competitive bids are stated as a yield to three decimals, in steps of 0.001%, a tenth of a basis point. The 7-year note auctioned on October 29, 2026 cleared at a high yield of 4.894%, so its 4.875% coupon rate sits 1.9 basis points below the yield to maturity buyers accepted.
- Daily yield moves. On October 22, 2026 the 10-year par yield fell 17 basis points in a day, from 5.13% to 4.96%, and across October it fell 30, from 5.24% to 4.94%. The Treasury yield curve page shows the latest moves by maturity, and today's T-bill rates does the same for bills.
- Spreads between yields. On October 30, 2026 the 20-year yield of 5.34% sat 3 basis points above the 30-year's 5.31%. Corporate bonds are priced at a credit spread over a Treasury of similar maturity, quoted in basis points too.
- Bank and money market rates. A savings rate cut from 4.10% to 3.85% is a 25 basis point cut; APY vs APR explains which of the two rates to compare.
How is a basis point different from a percent or a percentage point?
Basis points and percentage points both measure absolute changes in a rate, at 100 to 1; a percent change measures the move relative to the starting rate.
| Unit | What it measures | The 4.08% to 4.33% move | On $10,000 for a year |
|---|---|---|---|
| Basis point | Absolute change in a rate; 1 bp = 0.01 point | +25 bp | +$25 |
| Percentage point | Absolute change in a rate; 1 point = 100 bp | +0.25 point | +$25 |
| Percent change | The move as a share of the starting rate | +6.1% | No fixed dollar amount |
| Point of bond price | 1% of a bond's face value, a price unit | Not a yield measure | $100 per point |
A basis point of yield is also not a fixed amount of money. How far one basis point moves a security's price depends on how long it has left to run. A 13-week bill is priced from its discount rate on a 360-day year, so a 1 basis point change moves $10,000 of face value by $10,000 × 0.0001 × 91 ÷ 360 = $0.25. A new 2-year note bought at the October 30, 2026 par yield moves about $1.89 per basis point, and a new 10-year note about $7.82. Traders call this figure the dollar value of a basis point, or DV01; the bond duration entry covers the sensitivity measure behind it, and why bond prices fall when rates rise works the price math.
What mistakes do people make with basis points?
A frequent mistake is reading a basis point change as a percent change, which can make a small move sound many times larger than it is.
- Calling 25 basis points a 25% rise. A bill yield going from 4.08% to 4.33% has risen 0.25 point, or 6.1% of its old level. It has not risen 25% by any measure.
- Saying rates rose 1%. From a 4% rate that could mean 4.04% or 5%. Fed statements sidestep the problem by writing percentage points, and markets by writing basis points.
- Comparing two different yield measures. On October 30, 2026 the same 13-week bill had a bank discount rate of 3.99% and an investment yield of 4.08%, 9 basis points apart. A gap that size can come from the quoting convention alone, as T-bill discount rate vs investment rate explains.
- Mixing yield and price. A note's price falling 25 basis points (0.25 point per $100 of face value) is not the same as its yield rising 25 basis points; on a 10-year note, a 25 basis point rise in yield cuts the price by roughly 2 points.