Servicing Fees: What They Are and How They Work in Finance
Warren Team
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Key terms
- Finance ChargeThe total cost of credit, including interest and fees. Calculated based on average daily balance and APR. Avoided entirely by paying statement balance in full each month.
- DeFi (Decentralized Finance)A broad category of financial applications and services built on blockchain networks that operate without traditional intermediaries like banks or brokerages. DeFi platforms allow users to lend, borrow, trade, and earn interest on their crypto assets through smart contracts. This ecosystem aims to make financial services more accessible, transparent, and open to anyone with an internet connection.
- Proof of WorkA consensus mechanism that requires miners to solve computationally intensive mathematical puzzles to validate transactions and add new blocks to the blockchain. It was the first consensus method used in blockchain technology and remains the mechanism behind Bitcoin. While highly secure, Proof of Work is criticized for its significant energy consumption and environmental impact.
- Work-StudyA federal program that provides part-time employment to undergraduate and graduate students with financial need, allowing them to earn money to help pay for education expenses. Work-study jobs are often on campus and related to the student's field of study, providing both income and valuable work experience. Eligibility is determined through the FAFSA, and earnings do not count against you on future FAFSA applications.
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