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Real-world datasets are heavily skewed where some classes are significantly outnumbered by the other classes. In these situations, machine learning algorithms fail to achieve substantial efficacy while predicting these underrepresented instances. To solve this problem, many variations of synthetic minority oversampling methods (SMOTE) have been proposed to balance datasets which deal with continuous features. However, for datasets with both nominal and continuous features, SMOTE-NC is the only SMOTE-based oversampling technique to balance the data. In this paper, we present a novel minority oversampling method, SMOTE-ENC (SMOTE—Encoded Nominal and Continuous), in which nominal features are encoded as numeric values and the difference between two such numeric values reflects the amount of change of association with the minority class. Our experiments show that classification models using the SMOTE-ENC method offer better prediction than models using SMOTE-NC when the dataset has a substantial number of nominal features and also when there is some association between the categorical features and the target class. Additionally, our proposed method addressed one of the major limitations of the SMOTE-NC algorithm. SMOTE-NC can be applied only on mixed datasets that have features consisting of both continuous and nominal features and cannot function if all the features of the dataset are nominal. Our novel method has been generalized to be applied to both mixed datasets and nominal-only datasets.