What constitutes a credit balance?

A credit balance refers to the amount of money that exists in a borrower's account, indicating that the individual has either overpaid their credit obligations or received some type of credit that exceeds their outstanding balance. This can happen when payments are made in excess of the owed amount or promotions or refunds are applied to the account.

When considering credit accounts, the total amount due typically represents how much the borrower still owes, while the credit balance indicates a positive figure. Therefore, while the first choice describes the current liability of the cardholder, it does not capture the essence of a credit balance. The amount available to spend is affected by the available credit minus any outstanding balance, but does not represent a credit balance itself. The debt incurred before a transaction addresses a negative aspect of the account, while the total credit limit speaks to the overall maximum borrowing capacity without relating to the positive balance.

In summary, a credit balance specifically points to a situation where the cardholder has not only managed payments correctly but may even be in a favorable position with excess funds relative to their obligations.