There are two important terminologies that you must understand regarding these codes. Firstly Xbox LIVE codes and secondly Microsoft points. If you are a new user who has not yet signed up for them you must do so by visiting Xbox official website.If you want to get your subscription online in the comfort of your living room, then you have to input your credit card details. The cost for one month gold subscription is 7.99 US dollars, three months is 19.99 US dollars and one year is 49.99 US dollars. Choose the one according to your requirement. Alternatively if you do not want to reveal your credit card information online, then you can go to a nearby retail store and get your game card by cash payment. Either way now that you have purchased your subscription it's time to activate it. This process of activation requires codes. If you have purchased gold subscription online then its codes will be sent to your mail. If you purchased a game card then scratch the card to get the codes. Next you select 'My Xbox' in the dashboard. Enter your username and go to 'Join'. Under 'Account Management' select 'memberships' and 'redeem code'. Your gold membership will be activated immediately. You must remember that one code can be used only once.
Microsoft points are a kind of virtual currency that can be used to buy various games and other digital downloadable contents. For example if you want to buy a new game, then you can go to Xbox LIVE Marketplace in the Xbox website and buy that game using Microsoft Points. It's Marketplace is a virtual store to download all your Xbox 360 related contents. But how to get these Microsoft Points? Again there are two ways, one is to buy online through credit card and other is by gift cards. Before the launch of Xbox 360 Xbox original users had to download games from its Arcade. These games were smaller and fit for classic consoles. Even to buy from the Arcade you had to use Microsoft Points. After the launch of Xbox 360 to help download more complex and advanced games online and include various add-ons to existing games, Xbox LIVE Marketplace was formed. Xbox LIVE Arcade continues to be a part of marketplace.