why cant you use money on your MS account to buy from design labs?

Hello ReadyGator, this is Manuela. I'm an Independent Advisor and community user like you, ready to assist with this.

Not a Microsoft employee.

Since the creation of the new Xbox design lab website, Microsoft has been disabled this payment method.
Unfortunately, there is no official information about the decision.

It depends on whether you are talking about a normal controller from the Microsoft Store or a Design Lab one (as noted "theyre more expensive on amazon then a custom designed one"

Normal controllers bought through the Store can use MS credit. Design Labs controllers do not allow use of MS balance of gift card to purchase:

"No, there isn't a way to use gift cards, codes, or CSV to purchase a controller.

You also can't make split payments between account funds, codes, and another payment method on file with your Microsoft account."

Xbox Design Lab FAQs

Yes, you can use your Microsoft account balance for Design Lab.

I did try to ask about this on Support but nobody knows the answer. A definitive yes or no would be nice as I would like to buy a Design lab controller using MS credit.

It's not possible to use your Microsoft account balance for a Design Lab purchase.