An Enhancing Credit Card Fraud Detection through Data Preprocessing and SMOTE-Based Class Balancing: A Comparative Evaluation of Machine Learning Models
Credit card fraud remains a major challenge for financial institutions, both financially and operationally, as digital transactions continue to grow and fraud datasets remain highly imbalanced. This study compares the performance of several supervised machine learning models for fraud detection, using a unified data preprocessing pipeline. The approach includes removing duplicates, applying RobustScaler normalization, engineering features and using the Synthetic Minority Oversampling Technique (SMOTE) to balance classes before training. Four models were developed and tested Logistic Regression, Decision Tree, Random Forest and Artificial Neural Network (ANN) using the publicly available Kaggle Credit Card Fraud Detection dataset. Their performance was measured with Accuracy, Precision, Recall, F1-score and ROC-AUC metrics. Results showed that thorough preprocessing combined with SMOTE significantly improved the models ability to detect fraudulent transactions. Among them, the Random Forest model delivered the strongest overall performance, proving especially effective at handling highly imbalanced financial data. The comparative analysis also highlighted that ensemble learning methods generally outperform single classifiers in both accuracy and minority-class recognition. These findings emphasize the importance of pairing robust preprocessing strategies with machine learning techniques to boost fraud detection in real-world financial systems. The proposed system offers institutions a scalable and practical solution for building intelligent fraud detection systems, while laying the groundwork for future integration of Explainable AI (XAI) and real-time detection tools.