If it is free, then why ask for the credit card
From the site :
Why do you need my credit card for a free subscription?
Even though Microsoft Office Live Basics is a free service, 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.
We also require a credit card to facilitate payment of additional services (e.g., the purchase of additional domain names or extra storage). 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.
When you sign up for a Microsoft Office Live account, Microsoft performs a $1 authorization check on your credit card to verify that the card information you are using is valid and up to date. A temporary $1 charge may appear on your online credit card statement for a short period, but will not appear on your final billing statement for that period.