I shop on the Internet almost exclusively. I’ve been doing it for years, all from the comfort of my home and office. It saves on gas, fighting traffic, and waiting in line. I don’t, however, shop for shoes and some clothing. I think those kind of things should be tried on in a store.

Contrary to what many think, the Internet is the perfect place for credit cards. There is virtually no danger of the number being stolen in transit, provided you follow my tip from last week, “Upgrade your browser to get modern encryption”. (Click here to read that article)

The credit card number could certainly be misappropriated at the other end of a transaction, for example, at the online merchant's place of business. But that could happen just as easily at a restaurant. Have you ever followed a waiter to the back to see exactly what he does with your credit card? Me either.

Credit cards have two big advantages on the Internet. They allow for very quick payment for goods and they allow the buyer (that would be you) to withhold payment if the goods are unsatisfactory. If you can’t resolve a problem with the seller, call your credit card company and dispute the purchase.

Some people use debit cards instead of credit cards on the Internet. That is not a good idea. True, they're convenient. They allow quick payment. But the payment is really too quick.

When you submit a debit card, the merchant immediately pulls the money from your bank account. If you are unhappy with your purchase, you might have trouble disputing it.

By law, your maximum loss if your credit card number is stolen is $50, unless you fail to report the theft. In fact, most issuers will cover the entire loss.

In the past few years, single-use credit cards have appeared. The big push for this system came from American Express and Discover. You could apply for a one-time credit card number each time you make a purchase. That way, your permanent card number never makes an appearance on the Internet.

However, single usage does not seem to have been a huge hit with consumers. It probably offers some safeguards against fraud, but requires the consumer to go through extra steps. Consumers who are savvy enough to use a single-usage number probably also know that their liability is virtually zero, anyway.

I use Discovercard’s SOAN (Secure Online Account Numbers). To learn more about this, click here. By using their system, each time you make an online purchase, your credit card number is different making it impossible for thieves to know what your real credit card number is.

Here’s some other things that you should know regarding online auctions:

For the most part, buying through online auctions is safe but sometimes they can be risky. Even if you research the seller, you can't be sure of his or her integrity.

Escrow companies can reduce the risk of getting taken. They will hold your money until you receive and accept whatever you have bought. But crooks have found a way to set up phony auctions and phony escrow sites. You send in your money but you never see the goods.

Another scam is false shipping sites. They promise to allow you to track your shipment but the entire tracking arrangement is a sham. And again, you lose your money.

Bottom line: Make sure you know something about either the person or the escrow company with which you're dealing.