Basis Points

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Basis Points (BPS) are a percentage of the loan amount - one ten thousandth of the loan amount, or one one hundredth of one percent to be exact.  (1/100th of 1 percent)
 
 You may see this noted a a couple ways. 
 
 For Example - 100 BPS = 1% of the loan amount = 1 point in discount
 
 You will see these terms used interchangeably.   A 50 BPS discount is a half percentage point.  Sometime you will see it noted as .5 discount.
 
 You will also hear the term Basis Points when the Fed reduces rates.  A 50 Basis Point reduction is 1/2 of 1%.