The two terms sound similar but answer different questions. Moving from 20% to 25% is a rise of five percentage points, because the displayed rates differ by five. Relative to the original 20% rate, the increase is 25%. Both statements are mathematically correct, but they communicate different scales. Using the wrong term can exaggerate or understate a change in an interest rate, survey result, fee or conversion metric.
Formula and definitions
Formula: Percentage-point change = new percentage − old percentage
Use percentage points for rate gaps
When comparing two values already expressed as percentages, subtract them to get the difference in percentage points. A savings rate from 8% to 10% rises by two percentage points. A survey share from 42% to 45% rises by three percentage points. This simple difference is normally the clearest way to describe the gap itself, especially where people need to compare policy rates or performance ratios.
Use percent change for relative movement
Percent change divides the numerical change by the original value. If a rate moves from 20% to 25%, the five-point difference divided by 20% equals a 25% relative increase. Percent change answers how large the move is compared with its starting level. It can be less intuitive if the starting rate is close to zero, so include the original and final values whenever possible.
Watch base effects and near-zero starting values
A one-point move can be huge relative to a low initial rate and small relative to a high one. From 1% to 2% is one percentage point but a 100% relative increase. From 40% to 41% is also one point but only a 2.5% relative increase. When a denominator is zero or extremely small, a percentage change may be undefined or too unstable for a sensible headline.
Choose language for the reader’s decision
Use percentage points for rate spreads, survey gaps and changes between proportions. Use percent change when measuring a relative increase or decrease compared with a defined starting figure. In headlines, charts and executive summaries, write the base values beside the change so readers can check the statement without guessing the denominator or assuming the word 'percent' refers to the right measure.
Worked example
A fund fee falls from 1.20% to 0.90%. The rate declines by 0.30 percentage points. Relative to its original 1.20% level, the fee falls by 25%. On $10,000 invested for a year, the simple annual fee estimate changes from $120 to $90 before compounding, market movement or other costs. The point difference describes the rate gap; the relative change describes the size of the reduction against the previous fee.
| Item | Calculation or value | Meaning |
|---|---|---|
| Old rate | 1.20% | Starting value |
| New rate | 0.90% | Final value |
| Point change | -0.30 pp | New minus old |
| Relative change | -25% | Difference ÷ old |
Common mistakes
Do not say a rate rose by 5% when it moved from 20% to 25% unless you mean a 25% relative increase and explain the base. Never use percent change when the starting value is zero. When communicating small changes, include the units and both endpoint values to avoid ambiguity.
Next steps
Before publishing a change, write two lines: the raw difference in percentage points and the relative percent change. Keep only the measure that answers the question, and label the other when both are useful. Check that any graph axis and press summary use the same units as the calculation.
Frequently asked questions
Is a 10% to 12% change two percent?
It is two percentage points and a 20% relative increase from the original 10% rate.
Can percentage points be negative?
Yes. If the new percentage is below the old percentage, the point change is negative.
Related tools and guides: Percentage change calculator · Percentage calculator · General calculator