The Pros and Cons of Using a Password Manager in 2026
Passwords are still everywhere.
Employees need credentials for Microsoft 365, accounting software, banking, social media, supplier portals, websites, cloud services and specialist business applications. Expecting somebody to remember a completely different strong password for every service simply isn't realistic.
The predictable result is password reuse.
People create variations such as:
Company2025!
Company2026!
Company2026!!
Or they store passwords in spreadsheets, emails, browser notes and documents called something reassuringly subtle like:
Passwords.xlsx
A password manager — increasingly described as a credential manager because it can also manage passkeys — offers a considerably better approach.
The NCSC continues to recommend password managers for accounts that still require passwords, while its updated 2026 advice recommends passkeys over passwords wherever passkeys are available.
So are password managers still worth using in 2026?
For most businesses, yes.
But they are not risk-free.
What Is a Password Manager?
A password manager securely stores login credentials inside a protected vault.
Instead of an employee remembering 40 passwords, they normally need to authenticate to the credential manager and it can then retrieve or autofill the correct credentials when required.
Modern products may also provide:
Password generation.
Passkey storage.
Secure shared vaults.
Compromised-password alerts.
Cross-device synchronisation.
MFA support.
Access controls.
Audit logs.
Employee onboarding and offboarding.
Emergency access.
The NCSC says password managers make it easier for users to maintain unique passwords for individual services, while reducing the insecure workarounds people often adopt when overwhelmed by passwords.
Pro #1: You Can Use a Different Password Everywhere
This remains the biggest advantage.
Password reuse turns one compromised account into a potentially much larger incident.
If an employee uses the same credentials for several websites and one service suffers a breach, criminals can attempt those credentials elsewhere.
A password manager makes it practical to create a unique password for each service because the employee no longer needs to remember it.
That means instead of:
Hamilton2026!
the credential manager can generate something long and effectively random.
And because the user does not need to memorise it, there is little reason to make it predictable.
The NCSC recommends unique passwords for important accounts and specifically identifies password managers as a practical way to achieve this.
Pro #2: Password Managers Can Help Against Phishing
Autofill is not just about convenience.
A properly configured password manager normally associates a saved credential with the legitimate website.
Suppose an employee receives a convincing email saying:
Microsoft 365: Your password expires today. Sign in now.
They follow the link to a fake Microsoft login page.
It looks perfect.
The logos are right.
The colours are right.
The spelling is right.
But the domain is wrong.
A password manager may refuse to autofill the credentials because the website does not match the genuine site stored in the vault.
That sudden absence of autofill can provide an important warning.
The NCSC specifically identifies domain-matched autofill as one of the security benefits of password managers.
It isn't perfect phishing protection, but it adds another layer.
Pro #3: Sharing Business Credentials Can Be Safer
Ideally, employees should have their own named accounts.
That gives you accountability and makes access easier to revoke when someone leaves.
Unfortunately, some systems still require shared credentials.
Without a password manager, businesses often solve this by sending passwords through email, Teams or WhatsApp.
Or storing them in a shared document.
A business-grade password manager can instead place the credential inside a controlled shared vault.
People can be granted access when required and removed later.
This makes it much easier to answer:
Who currently has access to this account?
It also improves offboarding because you are not trying to remember every password a departing employee might have been told during the previous five years.
The NCSC recommends using delegation or individual identities rather than shared accounts where possible, with additional controls when password sharing genuinely cannot be avoided.
Pro #4: They Can Improve Offboarding
Someone leaves your company.
What happens to all the passwords they know?
If credentials have been casually shared, you may need to identify and change numerous passwords manually.
With a centrally managed business credential manager, administrators can potentially:
Remove the employee.
Revoke vault access.
Transfer business credentials.
Review which shared accounts they could access.
Rotate sensitive credentials where necessary.
That provides much better control than discovering six months later that a former employee still knows the password to an important supplier portal.
Pro #5: Password Managers Can Reduce Helpdesk Friction
Forgotten passwords waste time.
So do locked accounts and repeated password-reset requests.
A credential manager can reduce some of that burden by generating, storing and entering credentials automatically.
Good security should ideally make secure behaviour easier, not require employees to become memory athletes.
That usability issue matters. The NCSC warns that if employees find a password manager difficult or inconvenient, they may simply avoid using it and return to insecure workarounds.
What Are the Disadvantages of Password Managers?
The advantages are considerable.
But concentrating credentials into one system introduces risks that need to be understood.
Con #1: The Vault Becomes a Valuable Target
If one password protects one account, compromising it exposes one account.
If a credential manager contains dozens of business passwords, compromising the vault can potentially expose considerably more.
The NCSC acknowledges this directly: password managers are attractive targets precisely because successful compromise could give an attacker access to many stored credentials. Nevertheless, its assessment remains that their overall security benefits outweigh the risks.
That means the password manager itself deserves particularly strong protection.
Use:
A strong, unique primary password.
MFA or stronger authentication.
Managed and updated devices.
Restricted administrator access.
Access monitoring where available.
Never reuse the password-manager primary password anywhere else.
Con #2: Password-Manager Providers Can Be Breached
No software provider is immune from attack.
A useful real-world reminder came from the UK's Information Commissioner's Office, which fined LastPass UK Ltd £1.2 million in December 2025 over security failings connected to its 2022 breach.
The ICO said personal information associated with up to 1.6 million UK users was affected, although it found no evidence that customer password vaults themselves had been decrypted. Interestingly, the Information Commissioner still described password managers as safe and effective tools while stressing the need for providers to maintain appropriate security.
The lesson isn't:
“Never use a password manager.”
It is:
Choose the provider carefully.
Businesses should consider security architecture, encryption, independent audits, vulnerability management, incident notification, account recovery and the provider's security history.
Con #3: Your Primary Account Becomes Extremely Important
A password manager reduces the number of passwords you need to remember.
It does not mean you can stop caring about authentication.
Your primary password must be unique and strong.
Protect the password-manager account with MFA.
And understand the recovery process.
Some credential managers provide administrator recovery or emergency-access capabilities.
Others deliberately make recovery difficult because even the provider cannot decrypt your vault.
There is a genuine trade-off between security and recoverability.
A business needs to decide what happens if:
An employee forgets their primary password.
An administrator suddenly becomes unavailable.
The account is locked.
The credential-manager provider has an outage.
A device is lost.
Critical recovery credentials should not exist only inside the system you are trying to recover.
Con #4: It Creates Dependence on Another Service
Once employees rely on a password manager, access to it becomes important.
What happens during:
An internet outage?
A provider outage?
A device failure?
An account lockout?
A browser-extension problem?
Businesses should understand which credentials remain available offline and establish an emergency-access procedure for genuinely critical systems.
Think especially carefully about credentials needed for:
Backup systems.
Domain registrars.
Firewalls.
Cloud administrators.
Microsoft 365 emergency accounts.
Recovery systems.
You don't want your disaster-recovery procedure to begin:
“First, log into the password manager we currently can't access.”
Con #5: Poorly Managed Vaults Can Become a Mess
Buying licences does not automatically create good password management.
Without governance, businesses can still end up with:
Everybody having access to everything.
Business passwords stored in personal vaults.
Former employees retaining access.
Administrator credentials sitting beside low-risk website passwords.
Shared password-manager accounts.
No recovery plan.
Ignored breach warnings.
The tool needs managing.
Create appropriate vaults.
Use individual employee accounts.
Apply least privilege.
Keep privileged credentials separate.
Review access regularly.
And include the credential manager in your onboarding and offboarding procedures.
Browser Password Manager or Dedicated Business Password Manager?
Built-in password managers have improved substantially.
The NCSC says saving passwords in major browsers or device credential managers can be safe on your own appropriately secured devices, and it explicitly recommends this as an option for smaller organisations where users work within a consistent device ecosystem.
For personal use, that may be perfectly adequate.
Businesses may need more.
A dedicated business credential manager can offer capabilities such as:
Central administration.
Company-owned vaults.
Secure team sharing.
Audit logs.
Role-based permissions.
Offboarding controls.
Security reporting.
Emergency access.
Separation between personal and company credentials.
The right choice depends on the organisation.
A five-person business with tightly managed devices has different requirements from an organisation with 100 employees, multiple departments and privileged infrastructure accounts.
What About Passkeys?
This is the biggest change to password management in 2026.
The NCSC now recommends using passkeys instead of passwords wherever they are available. Passkeys use FIDO2 cryptography and are resistant to conventional phishing because the credential is bound to the legitimate service rather than something a user can accidentally type into a fake website.
And this does not make password managers obsolete.
Quite the opposite.
Credential managers increasingly store and synchronise:
Passwords
Passkeys
and sometimes other authentication information.
The term credential manager therefore increasingly makes more sense than password manager.
Where passkeys are supported:
Use them.
Where they aren't:
Use a unique password generated and stored by a credential manager, and enable 2SV/MFA.
That is also the NCSC's current recommendation.
Should Businesses Still Force Password Changes Every 90 Days?
Generally, no.
This is another piece of old password advice that should have disappeared years ago.
The NCSC advises organisations not to force routine password expiry, because employees tend to make predictable changes and the policy can actually encourage weaker password behaviour.
Passwords should instead be changed promptly when they are known or suspected to have been compromised.
Current Cyber Essentials v3.3, effective in 2026, likewise supports secure password storage such as password managers while advising against routine password expiry and unnecessary complexity rules.
So, Are Password Managers Safe?
No security technology is completely risk-free.
Password managers concentrate valuable information.
They depend on software.
Providers can suffer security incidents.
Recovery can be complicated.
But compare that with the realistic alternative:
Employees reusing passwords.
Shared passwords in spreadsheets.
Credentials emailed between colleagues.
Predictable password variations.
Nobody knowing who has access.
Former employees retaining passwords indefinitely.
For most organisations, a properly selected and managed business credential manager is significantly preferable to unmanaged password behaviour.
The NCSC reaches essentially the same conclusion: password managers are not perfect, but their benefits generally outweigh their risks and can improve organisational security.
A Sensible 2026 Password Strategy
The goal should no longer be simply:
“Make everyone create better passwords.”
A modern strategy is:
Use passkeys wherever services support them.
Use single sign-on where appropriate to reduce the number of separate credentials.
For accounts that still need passwords, use a managed credential manager to create unique passwords.
Protect important accounts with MFA or phishing-resistant authentication.
Avoid unnecessary shared accounts.
Separate privileged administrator credentials.
Monitor access.
Have a documented recovery process.
And don't force employees to change perfectly good passwords every 90 days for no reason.
That moves security away from expecting human beings to remember dozens of secrets and towards technology that makes secure behaviour much easier.
Password and Identity Security With Hamilton Group
Hamilton Group can help businesses improve the way they protect accounts, identities and privileged access.
That can include business password-manager deployment, passkeys, Microsoft Entra ID, MFA, phishing-resistant authentication, Conditional Access, Microsoft 365 security, employee onboarding and offboarding, endpoint security and wider cyber-security planning.
We can also review how credentials are currently stored and shared, identify risky administrator accounts and help remove insecure practices such as shared spreadsheets and password reuse.
And when your employees need IT support, our aim is to make first contact within 15 minutes.
Call Hamilton Group on 0330 043 0069 or visit hgmssp.com to speak with one of our IT and cyber-security experts.