We often use the phrases percent increase and percent decrease. Although you now have the skills to make sense of these phrases, many people misuse or misunderstand these terms!

Here is a common (and important) example. Consider the fact that banks pay you to remain a customer. If you have an account at a bank, they will add a small amount of money to your account, usually every month. They do this using percentages. These percentage amounts are small, but they add up!

For example, a bank recently announced that it will increase your savings account by 0.01 \% every month. This means that if you have $100.00 in your account, the next month the bank will compute 0.01% of your balance and add the result of their calculation to your bank account (leaving you with $100.001). Unless they decide to increase or lower the rate, they will do the same calculation next month based on your new account balance.

Another happy example of percent increases comes in the form of a raise. Let's say you are awarded a five percent raise on your current salary. How do you determine your new salary?
Back to '7.4 Percent Increase or Decrease and Other Percent Applications'