I really don't understand this conversion rate for GamePass Ultimate, it looks like bait...

Did you at least get a receipt mailed to the email that's associated with your Gamertag?

If not, it should be in your order history:

https://account.microsoft.com/billing/orders/

Like I mentioned in my first comment, make sure to turn off auto-renew if you don't want to deal with a surprise payment months from now.

https://account.microsoft.com/services/

It's a recurring subscription so you need to enter your card details for when it will recur beyond what's 'in credit'. After signing up to it you can cancel the recurring nature of the subscription - it's the same as Gold has always worked if you started
a subscription with a prepaid card.

In relation to the conversion rate, personally I disagree and feel like the y've found a good balance between an historical structure and an amalgamated structure to go forwards with the individual parts still relevant on their own.

If you have suggestions though I'm sure moving forward feedback would be appreciated as the entire system is new.

I have a suggestion, make things work before they put them up live on the system. Half the stuff they send doesn't work or tries to cheat me lately. Like the "FREE" spin in my email about 5 days ago. It not
only wasn't a free spin but wanted to charge 10 times the normal points for the spin. They finally fixed that yesterday. Then the 30 points for searching on Bing Homepage for 3 days over a weeks time, that's not working at
all. I emailed support on that 3 days ago and just got a reply today that they are sorry and will investigate. I could go on with more but I think you get my point.

I owe them not 1 penny for anything, I always pay up front.

It seems odd it's trying to charge you. You may have a past-due balance and owe Microsoft money: https://support.xbox.com/en-IE/billing/xbox-subscriptions/pay-past-due-balance-on-xbox-subscription

It's a recurring subscription so you need to enter your card details for when it will recur beyond what's 'in credit'. After signing up to it you can cancel the recurring nature of the subscription - it's the same as Gold has always worked if you started
a subscription with a prepaid card.

In relation to the conversion rate, personally I disagree and feel like the y've found a good balance between an historical structure and an amalgamated structure to go forwards with the individual parts still relevant on their own.

If you have suggestions though I'm sure moving forward feedback would be appreciated as the entire system is new.