A basis point (often abbreviated as bps) is a unit of measurement used in finance to express changes in interest rates, bond yields, or other percentages. One basis point is equal to 0.01% or 1/100th of a percent.

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For example:

If an interest rate changes from 5.00% to 5.25%, the change is 25 basis points.

A change from 3.75% to 3.50% represents a 25 basis point decrease.

Basis points are commonly used to avoid confusion when discussing small changes in percentage values, especially in areas like finance, banking, and investment.

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