Use Virtual Credit Cards
SoundMoneyTips.com recommends the use of "virtual credit cards" to make on-line purchases. These are available from MBNA, Citibank, Discover, and PayPal. They assign a new credit card number for each purchase or a short sequence of purchases. I'm interested in the PayPal version, since it will allow me to use my PayPal account at merchants that normally wouldn't accept PayPal payments. Haven't tried it yet.