Here's a sentence that sounds alarming: "the interest rate jumped 40%." Here's the exact same real-world change, described differently: "the interest rate rose from 5% to 7%, a 2 percentage point increase." Both are true. They describe the same event. And they create very different impressions — which is exactly why mixing up "percentage change" and "percentage points" is one of the most common (and most consequential) mistakes in financial writing.
Percentage points: the plain difference
When you're comparing two percentages, the simplest thing you can say is the plain arithmetic difference between them. 7% minus 5% is 2 — described as "2 percentage points," not "2%," specifically to avoid confusion with the calculation below. This is usually the more honest, less dramatic-sounding way to describe a change between two percentages.
Percentage change: relative to the starting point
Percentage change asks a different question: relative to where you started, how big was the move? The formula is:
Percentage change = ((new value − original value) / original value) × 100
Going from 5% to 7%: ((7 − 5) / 5) × 100 = 40%. The same 2-point move, expressed as a proportion of the original 5%, comes out to a 40% relative increase — a much bigger-sounding number for the identical underlying event, purely because the starting value was small.
Why the starting point matters so much
This is where it gets genuinely misleading if you're not paying attention: the smaller the original value, the more dramatic the same absolute point-change looks as a percentage. A rate moving from 40% to 42% is also a 2 percentage point increase — but that's only a 5% relative change, not 40%, because the starting point was much bigger. Same 2-point move, wildly different "percentage change" depending on where you started from. Anyone reporting a percentage change without giving the starting value is leaving out the one piece of context that determines whether the number is actually dramatic or not.
Using the tool
Our Percentage Calculator has a dedicated "percent change" mode that calculates the relative change between two values correctly — alongside "X% of Y" and "X is what % of Y" modes for the other common percentage questions, so you're not reaching for a different formula each time.
Try it here: Percentage Calculator.