7 Steps to Worry-Free Online Shopping

Shopping on the Internet while you're curled up at home in your jammies may seem comfortable and convenient. But it's not so appealing if you're worried about an online snooper peering at your keystrokes and stealing your credit-card number. Follow these guidelines and your holiday shopping experience will be safer and less stressful.

1. Always use your home computer. Steer clear of public computers in a hotel's business center, for example. They could have spyware that gives other users access to your financial information.

2. Look for the color bar or padlock at the bottom of the retailer's Web site. That's your assurance that the information you enter is encrypted so no one can copy it.

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3. Type in the retailer's online address rather than replying to an e-mail from the retailer. That will prevent you from being reeled in by a "phisher" using a fake e-mail and Web address that emulates a real site. When you click "reply" on one of these e-mail messages, you are sent to the phony site, where crooks can steal your financial information and passwords.

4. Create complex passwords and don't use the same one for all your accounts. It's particularly important to use a different password for your MySpace or Facebook account, warns Steve Furman , director of e-commerce for Discover Financial Services. "Social Web sites make an effort to protect your information, but they're not as secure as the banks."

5. Use a password manager. This software, which is often free, makes it easy to store multiple passwords so that you have to remember only one master password. You can download a password manager at KeePass.com or other Web sites.

Make sure the site specifies the type of encryption. It should have the letters AES -- for Advanced Encryption Standard -- which tells you it meets the highest standard available. Also check the number of bits; the larger the number, the more secure the encryption. Currently 256 is the highest available.

6. Use a single-use credit-card number. Bank of America, Citibank and Discover offer these numbers to cardholders (Bank of America's ShopSafe program is available only to its Visa and Mastercard account holders who bank online; its American Express cardholders can't use the service). You receive a number that is linked to your account but is not your credit-card number. Discover and Bank of America let you use one number to make multiple purchases from the same merchant. Citi's virtual account numbers can be used only once.

7. Consider using an alternative payment service, such as Bill Me Later or eBillMe, if your credit-card issuer does not offer a single-use number. EBillMe is available to anyone who banks online. You merely have to register the service as a payment option. Then, when you have finished shopping and are checking out, you enter eBillMe as the payee and receive an e-mailed copy of the bill.

There's no need to disclose any financial information on the retailer's Web site. Instead, you go to your bank's Web site and pay the same way you pay your regular bills. When you select Bill Me Later at the retailer's checkout, you provide your birth date and the last four digits of your Social Security number. When you receive your Bill Me Later bill, you can pay online or by mailing a check.

SEE ALSO: Kiplinger's Holiday Buying Guide