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Percentage Points vs Percentages

Percentage Points vs Percentages

Section titled “Percentage Points vs Percentages”

Percentage points measure an absolute difference between two percentages.

Percent change measures a relative change compared to the starting value.

Quick Example

Section titled “Quick Example”

If an interest rate goes from 5% to 8%:

  • The change is +3 percentage points (because 8%−5%=3%8\% - 5\% = 3\%).
  • The percent change is +60% (because 8−55×100=60%\frac{8 - 5}{5} \times 100 = 60\%).

When to Use Which

Section titled “When to Use Which”
  • Use percentage points for comparing rates (interest rates, unemployment, conversion rates, tax rates).
  • Use percent change when you want to describe growth/decline relative to the starting value.

Common Confusion (and how to avoid it)

Section titled “Common Confusion (and how to avoid it)”

A move from 1% to 2% is:

  • +1 percentage point
  • +100% percent change

That’s why headlines often prefer percentage points—they’re less misleading.

Section titled “Related Tools”