Originally Posted by Microsoft

Why do you need my credit card for a free subscription?

Even though Microsoft® Office Live is a free service during the beta period, we still require a credit card in order to validate that every customer is a legitimate entity. We are concerned for two reasons:
Microsoft wants to help mitigate fraud and strives to ensure that the Web sites we provide for our small business customers are for valid purposes. Requiring a valid credit card is intended to decrease the likelihood that malicious users will sign up.

Web site scams, such as "phishing" or spamming, often use fictitious Web sites to deceive consumers into disclosing credit card numbers, bank account information, Social Security numbers, passwords, or other sensitive information. We limit the number of offers to one per credit card number as added protection against malicious users signing up for our service.

We also require a credit card to facilitate payment of services during the beta (e.g., the purchase of additional domain names) as well as at the conclusion of the beta period, when customers will be asked if they would like to continue using our services on a paid, monthly subscription basis. With your explicit permission, we can establish monthly billing using your credit card information. You will be able to continue using our services without interruption and without having to submit additional account information.