What Is a Password Manager? (And Do I Need One?)

Password managers are a convenient and secure solution for storing and keeping track of dozens of passwords. Let’s see how they work and explore some of the available password management options.

What is a password manager?

A password manager is software that securely stores passwords and login information for online accounts. Such a program typically keeps track of usernames and their relevant passwords, but some password managers also offer additional storage options. For example, you could potentially store credit cards, bank accounts, addresses, and personal notes.

If you’re learning how to stay safe online, a password manager could help you take the next step in cybersecurity. Most password managers offer encrypted storage for your passwords to help block hackers and prevent malware access. You typically use a master password or a biometric signature to access the information contained within your password manager.

Another use for popular password managers is to generate random and unique passwords for you to use with your online accounts. This tool could come in handy if you frequently change your passwords and need help coming up with new ones.

Security experts often recommend password managers for online security purposes. Password managers often provide a better option than remembering and organizing passwords yourself.

Featured password managers compared

Types of password managers

Password managers come in a few different forms, including:

Desktop apps

An application you could run from your computer desktop, whether you run Windows or Mac, that might only be available on one device. The low availability could make it harder for hackers to crack but limits its usability if you have multiple devices. You can also set up desktop apps to save your passwords on one device without syncing them to the cloud.

Mobile apps

Typically available on iOS (Apple iPhone) and Android devices to provide easy access to your information anywhere. Third-party password management apps are considered more secure than built-in apps because, with the latter, your passwords are only as secure as your phone. On the other hand, dedicated password managers offer enhanced encryption protocols and authentication methods.

Browser extensions

Password managers are typically available to download as an extension on web browsers such as Safari, Google Chrome, Firefox, and Microsoft Edge. A browser extension be helpful if you frequently use web browsers and need quick access to different passwords. An advantage to using a password manager extension is that you don't have to input online passwords manually. 

Cloud-based services

Most premium password managers offer cloud-based services, which means they store passwords and other sensitive account data securely in the cloud. This service also provides easy access to your information from different devices. You could access your password manager from a phone, web browser, or both. 

Single sign-on (SSO)

This password management system reduces the need to use different passwords for multiple accounts. SSO is often used in business settings so employees can access corporate services without creating multiple accounts. An example of SSO is using your Google or Facebook account to create accounts with other websites quickly.

Open-source

Open-source software allows for free reviews, audits, and contributions to a password manager’s source code to help improve its security. Open-source password managers could be aimed at desktop devices or mobile devices. They could also be built for browsers and could make use of distributed networks. Bitwarden is a popular open-source password manager.

What are the benefits of using a password manager?

Password managers typically use encryption methods to keep your information safe. Many apps also offer two-factor authentication or a verification method, such as a one-time code sent to your phone. Here are some of the main advantages of using a password manager:

• Remember passwords: It’s not uncommon for a person to have dozens of passwords. Password managers could take a load off your brain and safely store your passwords for when you need them. 
• Generate secure passwords: Password managers typically provide a tool to create a strong password using randomly generated uppercase and lowercase letters, numbers, and symbols. You often get to choose the password length and what types of characters you’d like to include.
• Avoid reusing passwords: Using the same password for different accounts is never recommended because it could increase your potential security risk. Some password managers notify if you reuse a password or use a weak one. They would then prompt you to create a new password.
• Increase online security: Password managers work to increase your online security while also providing a convenient way to manage important online information. This type of security could significantly help with identity protection since your passwords would be randomly generated and secure.

What features to look for in a password manager

If you’re new to password managers, you're probably unfamiliar with the bells and whistles. All third-party password managers offer the same core features, like the ability to create, store, and manage your passwords securely. Those are a given. Depending on the service, you may have access to more advanced security features like dark web scanning and data breach alerts. Premium password management solutions may include proprietary security features, like Keeper BreachWatch, 1Password Watchtower, or Bitwarden Send. Here's a rundown of features to look for in a third-party password manager.

Standard features

• Password vault: A vault offers encrypted storage for all your saved passwords and is typically accessed with a master password. 
• Password generator: Random password generators help you to quickly create complex passwords based on your character specifications, like uppercase letters, lowercase letters, numbers, and symbols. 
• Passkeys: Passwordless authentication, such as passkey, allows you to access your account through cryptographic key pairs. In simplest terms, you can use an authenticator to create a unique passkey that connects your account to a particular app or website. Most premium password managers allow you to create, store, and manage passkeys in addition to passwords. 
• Password sharing: This feature allows you to share passwords with others. You can share your entire password vault or select a one-off password. You may also be able to include access restrictions, like the shared password becoming unavailable after a specified date or time. The biggest limitation is that some password managers require the recipient to be an account holder as well.
• Import/export passwords: Not all password managers include this feature, but the ability to import your saved passwords is essential. Otherwise, you would have to input all your login credentials manually. Import features typically allow you to import passwords from a CSV (exported from another third-party password manager or your browser's built-in password manager). 
• Autofill: Autofill and form filler enable quick access to your accounts or saved records and allow you to sync information across multiple devices, browsers, and operating systems. If you don't already have your logins saved, your password manager may conveniently prompt you to save new credentials upon sign-in.
• 2FA or MFA: Two-factor and multi-factor authentication further secure your password manager account by utilizing additional verification methods such as SMS, a one-time password (OTP), biometric authentication, security questions, and more. 
• Encrypted storage: A big benefit to using a third-party password manager is knowing your data is safe behind strong encryption protocols. Top password managers use military-grade encryption like AES 256-bit. NordPass is considered the cream of the crop because it goes a step beyond and employs xChaCha20 encryption. For context, Google and Cloudflare also use xChaCha20. 
• Cloud backup: Cloud storage or cloud backup means your data is recoverable if you lose your devices. It also allows easy accessibility since you can sync your passwords across devices.
• Broad device and browser compatibility: Whereas free built-in browser password managers are limited to the browser (e.g., Google password manager is limited to the Chrome browser), third-party password managers offer broad device and browser compatibility. You can also sync your passwords across mobile devices. 

Advanced security features

• Password health reports: This advanced security feature lets you know if any of your saved passwords are weak, reused, or even compromised. Reports can be sent to you at a designated interval via email or only available via the password manager's security dashboard. 

• Secure notes: This advanced security feature allows you to safely store more information than just passwords, such as credit card information, bank account information, and more, from multiple devices.

• Data breach alerts: This advanced security feature lets you know if your passwords have been compromised in a data breach. Most premium password managers provide immediate steps you can take to secure your accounts. 

• Dark web scanning and alerts: This advanced security feature lets you know if your accounts have been compromised. Password managers base scans on your email address(es) or stored passwords and alert you via an email report or the security dashboard if your info is available on the dark web.

• Digital legacy (or emergency access): This advanced security feature allows you to designate someone to receive your credentials in case of an emergency or death. Digital legacy ensures your family members can access financial information or online banking accounts with ease. 

Premium security features

• Virtual private network (VPN): Some premium password managers may include access to a virtual private network with your subscription, allowing for enhanced online security. For example, Dashlane includes HotSpot Shield VPN in its premium subscription tiers. 
• Email masking: The ability to cloak your real email address offers more robust security when browsing or shopping online. NordPass, 1Password, and Bitwarden offer an email masking feature. 
• Secure file storage: Some premium password managers will include additional encrypted storage for you to secure sensitive documents or files. NordPass, 1Password, Bitwarden, Keeper, and Dashlane offer secure file storage, typically as an add-on to your password manager subscription. 
• Travel Mode: 1Password's propriety security feature Travel Mode allows you to remove your login credentials while traveling. You can then restore access to passwords of your choosing. 

FAQs

Bottom line

The best password managers offer an effective way to safely keep track of multiple passwords, reducing the concern that you might forget or misplace a password. Plus, the ability to create, store, and manage complex passwords helps thwart hackers looking to steal your identity or access your online financial accounts. Third-party password managers offer a ton of additional security benefits compared to free built-in browser password managers, further safeguarding your login credentials — and identity.