Hi,
You need to store the password somewhere, but I do agree that the /etc/fstab file isn't the place to do it. And setting the permissions of that file to 700 will probably have side-effects you don't want.
Have a look at this article:
Access Windows Shares from Linux
The user/password is still in a readable file, but one that is dedicated, and it is root's private property.
Hope this helps.
PS: Linux is rather safe, but it is bound to the rules/wishes of the machine it connects to (windows in this case), thus: plain user/password.