HashiCorp Terraform Infrastructure as Code (IaC) Practice Test 2025 - Free Terraform Exam Questions and Study Guide

An API Token for Terraform Cloud or Terraform Enterprise can be securely stored in the credentials.tfrc.json file. This file is specifically designed for storing credentials and API tokens for Terraform, making it a suitable choice for maintaining sensitive information. By using this file, you can ensure that your tokens are managed in a way that aligns with best practices for security, as it allows for better organization and encryption options.

The credentials.tfrc.json file supports both local and global configurations, which gives you flexibility in how and where you manage your credentials. It is important to note that when using this file, you should ensure that it has appropriate file permissions set, preventing unauthorized access to the stored tokens.

Storing tokens in environment variables is an alternative method, but it may not be as organized or secure as using the credentials file. Similarly, while the terraform.rc file allows configuration settings for Terraform, it is generally less used for storing sensitive API tokens due to potential exposure in logs or command histories. The main Terraform configuration file is not designed for storing credentials, thus making it an unsuitable option for this purpose.

Using the credentials.tfrc.json file helps maintain a clean separation between configuration and sensitive data, streamlining access management in a secure manner.