Let’s face it—we all have a lot of online accounts. And each of those accounts needs a strong, unique password to protect it. It’s no surprise that many people resort to using the same password over and over again, even though it puts their personal and financial information at major risk of theft. Luckily, that’s where a password manager comes in.
What is a Password Manager?
A password manager is a type of software that stores and manages your login credentials so you don’t have to memorize each one. The best password vaults store your data on an encrypted database. This means that your data is converted from a readable format to an encoded format—making it nearly impossible for a bad guy to access your passwords.
3 Benefits of Password Managers
1. You don’t have to remember every single password.
To access your vault, you only need to remember your master password, instead of having to remember a unique password for each and every account you own. It also allows you to organize all of your passwords in one safe place, eliminating the numerous sticky notes with passwords written on them.
2. It can help you create complex, unique passwords for each account.
Most password management tools have an option to auto-generate strong, long passwords—we recommend at least 20 characters—that include letters, numbers and characters. By taking advantage of the software’s ability to produce a randomized password, it makes it extremely difficult for a hacker to guess.
3. It’s a tool that can help you avoid the impacts of a data breach.
Data breaches are becoming increasingly more common, and if you’re using the same password across multiple accounts, you run the risk of exposing yourself to identity theft. Most password managers help you generate strong, unique passwords for each account, allowing you to separate your data. Even if a hacker gains access to one of your passwords, they’ll have a hard time accessing the rest.
2 Popular Types of Password Managers
Below we describe the two most popular types of password managers for individuals, and the pros and cons of each so you can make an educated decision on what will work best for you. It’s important to note that there are other types of password management solutions out there—such as locally installed or on-premises tools—but these two are the most accessible for individuals looking to protect their personal data.
Cloud-based password managers encrypt your sensitive data on their own cloud or server. Typically, these are subscription-based, so you pay a monthly fee to use their service.
- Passwords and other sensitive information can be stored and accessed anywhere from any device
- Passwords and other sensitive data can be securely shared between family members
- Typically includes important features like a password generator tool, password strength testing, multi-factor authentication and dark web monitoring
- Although the risk is small, cloud-based services have a slight chance of being breached—especially those cloud-based accounts without a strong master password or multi-factor authentication enabled.
Most popular web browsers—such as Chrome, Firefox, Opera, and Safari—offer built-in password managers. When you visit a new website, your browser will automatically ask you if you’d like to save your password or other sensitive data—like your credit card information, shipping address or birthdate. When you visit that webpage again, the browser will automatically fill in that information for you.
- Easy to set up
- Convenient to use
- Passwords are synced between devices as long as you are using the same browser
- Least secure
- Lacks the ability to set a master password (e.g. if you use Chrome and your Google account is compromised, hackers can access your saved passwords and sensitive data)
- Lacks other important security features—including multi-factor authentication, password strength testing and dark web monitoring
- Passwords cannot be synced between different browsers (e.g. if you use Chrome on your computer and Safari on your smartphone, you cannot sync passwords between the two)
Be cautious of free versions.
Secure technology takes time, money and expertise to develop. The most secure password management tools typically require some type of payment, like a recurring monthly or yearly subscription fee. Keep in mind that many free versions—like browser-based management tools—lack important security features. If you’re unsure whether a particular password manager has the features you need, take advantage of free trials before committing to a subscription.
Investigate your options.
No matter what type of password management software you choose, do your research. Make sure to choose a reputable, trustworthy company to help you manage your passwords and sensitive information.
Keep in mind that cloud-based, standalone password managers exclusively focus on developing secure password management tools that are highly capable of dealing with security vulnerabilities and hackers. On the other hand, a browser’s primary function is to help its users find information online, with password management being a secondary add-on.
Create a unique, strong master password and use multi-factor authentication.
Although no password manager is 100 percent secure, you can significantly improve your data’s security by choosing a password management solution that requires a master password and supports multi-factor authentication. When setting up a master password, consider choosing a complex passphrase that is at least 20 characters long and doesn’t include any personal information like your birthday or pet’s name—which are the first thing hackers use when trying to gain access to your accounts. In addition, setting up multi-factor authentication is an extra layer of defense beyond just your master password, which requires additional credentials to verify your identity.
When choosing a password manager that works best for you, it’s important to consider your budget and functionality needs. We highly recommend choosing a password management solution that offers important security features—such as a master password, password generation tool, password strength testing and the ability to enable multi-factor authentication.