This basis point calculator converts basis points into the numbers you actually need: a percentage, a plain decimal, a dollar change on any amount, and a new interest rate once the change is applied. A basis point, shortened to bps or bp, is one hundredth of one percent, so 100 basis points make 1 percent and 25 basis points make 0.25 percent. Banks, economists and the Reserve Bank talk in basis points because it avoids the ambiguity of saying a rate rose by a percent when they mean a percentage point. You enter the number of basis points, the balance or amount you want to measure them against, and a starting rate, and the calculator shows the percentage, the decimal used in formulas, the dollar effect for one year, and the rate after the change. It is handy when the Official Cash Rate moves, when a lender quotes a margin, or when you are comparing term deposit and mortgage offers that differ by a few basis points. The dollar figure is a simple one year estimate on the balance you enter and does not account for compounding, fees or how often interest is actually charged, so treat it as a guide rather than an exact repayment change.
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bps
$
%
0.25%
basis points as a percentage
As a decimal0.0025
Change per year$1,250
New rate6.75%
1 basis point is 0.01 percent, so 100 bps is 1 percent. The dollar figure is a one year estimate on the amount entered, before compounding or fees. Estimate only.
How it works
Because a basis point is one hundredth of a percent, you divide the basis points by 100 to get the percentage, and by 10,000 to get the decimal used in formulas. The dollar change is that decimal multiplied by the amount you enter, which gives the extra interest over one year at simple interest. The new rate is your starting rate plus the percentage the basis points represent. To convert back, multiply any percentage by 100 to express it in basis points.
Worked example
Say the Official Cash Rate rises by 25 basis points and you have a $500,000 mortgage at 6.5 percent. Dividing 25 by 100 gives 0.25 percent, and dividing by 10,000 gives 0.0025. Multiplying 0.0025 by 500,000 gives $1,250 of extra interest over a year. Adding 0.25 percent to your 6.5 percent starting rate gives a new rate of 6.75 percent. The actual repayment change depends on your loan balance, term and how often interest is charged.
