7-zip is also a good free alternative.
It appears that it will only extract RAR files, rather than create them but it works with a fair number of other formats aswell
http://www.7-zip.org/
Supported formats:
* Packing / unpacking: 7z, ZIP, GZIP, BZIP2 and TAR
* Unpacking only: ARJ, CAB, CHM, CPIO, DEB, DMG, HFS, ISO, LZH, LZMA, MSI, NSIS, RAR, RPM, UDF, WIM, XAR and Z.