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Better now than never I suppose...So, in general, is it better for a capacitor to have a tolerance of +/- 1% or +/- 5% or +/- 20%. What does tolerance really mean to me and to the application?
The lower the number the more accurate the cap value to its marking value. A 20% 10 uF cap can be anything between 8 uF and 12 uF.
What it means to your application depends on application. For a filter cap on a power supply 20% tolerance may be fine. For a resistor divider network in the scale setting switch on your DVM you want the best you can get (1% or better).
Generally, you pay more for a tighter tolerance component.
The type of cap limits the available tolerance. And aluminum electrolytic is rarely tighter than ±20% and more likely will be listed as +80/-20% because they're used more for bulk capacitance (the more the better) in power supply filtering. You have to have stable dielectrics to achieve the ability to gain tolerances of ±1%. Polyester, polypropylene, polystyrene, silver mica and such can achieve those. Caps are usually used against resistors for frequency or timing, so standard values are limited to the 20% tolerance category, even though the tolerance may be a lot tigher for the component. It's usually the resistor that's selected or made variable after the basic capacitor is selected.
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