Basis points, percentage points and relative change
A change between two rates can be described in basis points, percentage points or relative percent.
Choose the unit of change
A change between two rates can be described in basis points, percentage points or relative percent. These descriptions answer different questions. One basis point is one hundredth of a percentage point. Record whether the original number is a percentage, a decimal fraction or a monetary amount before calculating; a spreadsheet cell displaying 4% may store 0.04.
A fixed 10,000-unit base produces fees of 20 at 0.20% and 25 at 0.25%. The five-unit cash increase corresponds to five basis points, not five percentage points.
Open full-size diagram ↗Calculate the same move three ways
Use an invented rate increase from 4.00% to 4.25%. Subtracting the displayed percentages gives 0.25 percentage points, equivalent to 25 basis points. Dividing that 0.25-point increase by the original 4.00% gives a relative increase of 6.25%. All three describe the same move, but writing only a 6.25% rate rise can easily be mistaken for a new rate of 10.25%. The new level is still 4.25%.
Worked example: Old fee: 20; New fee: 25; Extra charge: 5. Invented values; units follow the row labels and article.
Open full-size diagram ↗Translate a fee change into cash
For a hypothetical fixed 10,000-unit charge base, a fee moving from 0.20% to 0.25% increases from 20 to 25 currency units. The increase is five basis points and five currency units on that base. It is also a 25% relative increase in the fee rate. If the charge base changes, calculate both cash charges explicitly rather than attributing the entire cash difference to the rate.
Calculation checklist: Policy example: 4.00% → 4.25%; Absolute move: 25 basis points; Relative increase: 6.25%. Preserve these definitions when reproducing the example.
Open full-size diagram ↗Write an unambiguous note
A useful note states old rate, new rate, absolute rate change and base amount separately. Federal Reserve material uses target ranges and policy-rate terminology; this example does not describe a current policy decision. SanForex risk/reward outputs use percentages in their own definitions, not central-bank rates. Always name the denominator and period when copying a percentage between worksheets.
Sources and conventions
Examples are hypothetical. Worked examples state their formulas and assumptions in the article; our methodology explains the related calculators. Broker contract specifications determine actual lot, margin and execution conditions. These sources document definitions and data; a source link does not imply endorsement of SanForex or a trading service.
These materials are prepared with AI assistance and checked against worked examples and deterministic calculation tests where applicable. They are not an expert suitability assessment or investment advice.
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