THE GIFT CARD IS NOT ACCREDITED ON THE ACCOUNT

Was this a Store or an Xbox gift card. Certain gift cards cannot be used in certain stores. Can you check the type of gift card it is please.

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Gift cards cannot be used to purchase gift cards. The Microsoft account balance is essentially the same as a gift card since funds typically come from Xbox gift cards.

I tried that but it wont let me add a gift card, only uses my card and wont let me select a gift card option

You can apply both gift cards to your account and they will combine as 1 Microsoft account credit. For example if you wanted to buy a game worth $100 but you had 2x $50 gift cards, you can apply both of the $50 gift cards and then purchase the game (as they will combine both gift cards into a single $100 account credit)

To apply gift cards to your account use this link: https://redeem.microsoft.com/

Alternatively, you can also apply gift cards to your account by opening up the Microsoft store app > Hovering over the menu > then select “redeem”.

Yup. You can't buy a gift card with a gift card.