billing / prepaid

You will need to pay the account balance before adding the code. You can do this right from
account.microsoft.com on the subscriptions tab. You cannot use the code itself to pay the balance, you will need to use a credit card. Once the balance is paid you can add the code.

Try these steps!
http://support.xbox.com/en-US/billing-and-subscriptions/prepaid-codes/prepaid-code-errors

that is the same with phone plans there is prepaid and there is billing

if you want prepaid you go prepaid but deal with the prepaid costs

if you want the cheap and convience of autobilling you buy billing accounts

this isn't rocket science

the prepaid cards are clearly labeled even prepaid membership cards are still available

Check out this guide https://support.xbox.com/en-US/billing/prepaid-codes/prepaid-code-errors#4cd9f44b85614844abf0fe8f172a5036

Yes. You still have to have billing information (address) on file even if you use prepaid cards. It's for verification purposes in case anything should happen with your account.