That doesn't mean you have to pay full price, however. We have a guide on How to Get Xbox Live for Less Than $50 a Year.
Xbox Live does not require a credit card to sign up. You can use one, but you can also buy subscription cards at retailers. You just pick up a subscription card at a retailer and put in the code on your Xbox 360. Simple. Easy.
Just to clarify, the Free Xbox Live service gives you access to voice chat as well as the Xbox Live Marketplace but you can't play games online. The paid Xbox Live Gold service gives you all of the Free level features along with the ability to play online as well as occasional early access to demos and other things.
For more information, check out Xbox.com.