Which AWS service should be used to create a billing alarm?

The appropriate AWS service to create a billing alarm is AWS CloudWatch. This service monitors AWS resources and applications in real time and allows users to set up alarms based on various metrics, including billing data.

By using CloudWatch, you can track the estimated charges for your AWS account and define thresholds that, when exceeded, will trigger notifications. This is particularly important for managing costs in the cloud, enabling proactive measures to avoid unexpected charges.

While AWS Lambda, S3, and IAM serve other critical roles in the AWS ecosystem—Lambda for serverless compute, S3 for object storage, and IAM for identity and access management—they don’t offer the specific functionality for billing monitoring and alarms that CloudWatch provides. Thus, utilizing CloudWatch is essential for effective cost management within AWS.