they "bill" you on the first day of the month from when they bill...so once you pay, its basically buying the "Next" however many days of play.
Technically (and turbine has stated this specifically) if you cancel your account, your characters may be deleted and you are not guaranteed the same price (but that was more for beta...i think the price is going to stay at what it is).
Just so you know it saves more money buying a 3 month or a 6 month plan though, and the charges would still be on thier next billing cycle, or something, im tired i dont know.
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Things I sometimes play...
"What do you want to be when you grow up?"
"I want to be a unicorn!"
"Awww, why's that?"........
"So I can stab people with my face."