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These choices will be signaled globally to our partners and will not affect browsing data. We and our partners process data to: Actively scan device characteristics for identification. I Accept Show Purposes. Your Money. Personal Finance. Your Practice. Popular Courses. Bonds Fixed Income Essentials. What Are Basis Points? Key Takeaways Basis points, otherwise known as bps or "bips," are a unit of measure used in finance to describe the percentage change in the value or rate of a financial instrument.
In the bond market, a basis point is used to refer to the yield that a bond pays to the investor. Basis Points Percentage Terms 1 0. Article Sources. Investopedia requires writers to use primary sources to support their work. These include white papers, government data, original reporting, and interviews with industry experts. We also reference original research from other reputable publishers where appropriate. You can learn more about the standards we follow in producing accurate, unbiased content in our editorial policy.
Compare Accounts. The offers that appear in this table are from partnerships from which Investopedia receives compensation. This compensation may impact how and where listings appear. The Fed uses basis points to make changes in the federal funds rate, which is the interest that banks charge each other to borrow money overnight.
The federal funds rate influences the prime rate. So, if the prime rate is 4 percent and the Fed raises the federal funds rate by 25 basis points, the prime rate will rise to 4. This affects the cost of mortgages and credit card rates, for example. Incremental changes in the cost of borrowing, in the form of basis points, have a big impact on the overall economy. Use our calculator to estimate the growth of your savings over time. Wire transfer fees can be expensive, but here are ways to send money for less.
Saving money can be challenging for disabled individuals, but these special types of saving accounts can help you gain some financial security. Walk away with stacks of cash just for opening a checking or savings account. Bank failures happen from time to time. It may not be time to ditch your physical wallet just yet, but digital wallets offer several benefits.
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