Here’s another award-winning program that was developed and is being improved through a community effort: 7-ZIP. 
It supports a large number of file compression formats, such as ZIP, RAR, CAB, GZIP, and TAR. It also has its own format called 7Z, which promises to be 30%-50% better than ZIP. Read about 7Z here.
There is also a portable version of this application that you can keep on a USB drive or CD and use on any computer without having to install it.
Like most freeware, the 7-zip developer provides a page where you can donate some money if you like his product, but otherwise the product is completely free.