How Hackers Steal Passwords: 7 Methods Everyone Should Know

Your passwords are under constant attack. Not in the dramatic, movie-hacker sense – but in the quiet, industrialized, automated sense. Every day, billions of login attempts are made using stolen credentials, automated cracking tools, and deceptive emails designed to trick you into handing over your keys. Understanding how these attacks work is the first step toward making them fail.

This article is part of our password security series. Here we break down the seven most common methods attackers use to steal passwords, how each one works, and what you can do to protect yourself against every single one.

1. Brute Force Attacks

A brute force attack is the most straightforward method: an attacker systematically tries every possible combination of characters until the correct password is found. It is the digital equivalent of trying every key on a keyring until one fits.

Modern GPUs have made brute force attacks disturbingly fast. A single high-end graphics card can test over 100 billion MD5 hashes per second. An 8-character password using lowercase letters and numbers has roughly 2.8 trillion possible combinations – which means it falls in under 30 seconds.

Brute force attacks come in several flavors:

• Pure brute force – testing every character combination sequentially
• Dictionary attacks – testing known words, common passwords, and previously breached credentials first
• Hybrid attacks – combining dictionary words with numbers, symbols, and common transformations
• Rule-based attacks – applying patterns like capitalizing the first letter, appending a year, or replacing “a” with “@”

For a detailed look at how each method works and how long different password types survive, see our guide on password cracking explained.

How to Defend Against Brute Force

• Use passwords of at least 16 characters, or better yet, a random passphrase of 5 or more words
• Avoid common substitution patterns like “p@$$w0rd” – cracking tools already account for these
• Use a password manager to generate truly random credentials for every account
• A strong password built on length and randomness makes brute force attacks computationally infeasible

2. Phishing

Phishing is the single most prolific attack vector on the internet. An estimated 3.4 billion phishing emails are sent every day worldwide. The concept is simple: an attacker creates a fake login page or a convincing email that tricks you into entering your credentials voluntarily.

Phishing attacks range from crude mass emails riddled with typos to highly targeted “spear phishing” campaigns that reference your real name, employer, recent purchases, or even ongoing conversations. Some phishing pages are pixel-perfect replicas of legitimate login screens for services like Microsoft 365, Google, or your bank.

The reason phishing is so effective is that it bypasses password strength entirely. It does not matter if your password has 128 bits of entropy – if you type it into an attacker’s fake login page, it is compromised instantly.

Common phishing tactics include:

• Urgency – “Your account will be locked in 24 hours”
• Authority – emails appearing to come from IT departments, executives, or government agencies
• Familiarity – messages that reference recent transactions or known contacts
• Fear – “Suspicious login detected on your account”

For a deeper dive into recognizing and defending against phishing attempts, see our phishing guide.

How to Defend Against Phishing

• Always verify the URL before entering credentials – check for subtle misspellings or unusual domains
• Never click login links in emails; navigate to sites directly through your browser or bookmarks
• Use a password manager with autofill – it will refuse to fill credentials on a domain that does not match, acting as a built-in phishing detector
• Enable two-factor authentication so that even a stolen password alone is not enough to access your account

3. Credential Stuffing

Credential stuffing exploits one of the most dangerous habits in password security: reuse. Research consistently shows that 94% of passwords are reused across multiple accounts. Attackers know this, and they exploit it at scale.

Here is how it works. A data breach at one service exposes millions of email-and-password pairs. Attackers take those pairs and automatically test them against hundreds of other services – banking sites, email providers, social media platforms, shopping sites. Because most people reuse passwords, a significant percentage of those stolen credentials will work somewhere else.

Unlike brute force attacks, credential stuffing requires no password cracking at all. The passwords are already known in plaintext. The attacker simply needs to find other accounts where the same credentials were used.

Credential stuffing attacks are automated, fast, and cheap to execute. Attackers use botnets and proxy networks to distribute login attempts across thousands of IP addresses, making them harder to detect and block.

To understand how breaches fuel credential stuffing and the real-world consequences of password reuse, read our article on password reuse dangers.

How to Defend Against Credential Stuffing

• Use a unique password for every single account – this is the only complete defense
• Let a password manager like PanicVault generate and store a different random password for each service
• Check whether your credentials have appeared in known breaches at Have I Been Pwned
• Enable two-factor authentication on high-value accounts as a second line of defense
• Monitor your accounts for data breach notifications and act on them immediately

4. Keyloggers and Malware

Keyloggers are malicious programs that record every keystroke you type, including passwords, credit card numbers, and private messages. They can be delivered through malware-infected email attachments, compromised websites, fake software downloads, or even malicious browser extensions.

Beyond simple keystroke logging, modern password-stealing malware is significantly more sophisticated:

• Form grabbers intercept data submitted through web forms before it is encrypted by HTTPS
• Clipboard hijackers capture passwords copied from one application and pasted into another
• Memory scrapers extract credentials stored in browser memory or application processes
• Screen capture malware takes periodic screenshots or records video of your screen
• Browser credential stealers extract saved passwords directly from your browser’s password storage

This type of attack is particularly dangerous because the victim typically has no idea it is happening. A keylogger runs silently in the background, collecting credentials for days or weeks before the attacker uses them.

How to Defend Against Keyloggers and Malware

• Keep your operating system and all software up to date with the latest security patches
• Do not download software from unofficial sources or click on unexpected email attachments
• Use a dedicated password manager application rather than saving passwords in your browser – password managers that use autofill can bypass keyloggers since you never type the password
• Enable two-factor authentication so that captured passwords alone are insufficient
• Run reputable antivirus or endpoint protection software
• Be cautious with browser extensions – only install those from verified publishers

5. Shoulder Surfing

Shoulder surfing is the low-tech cousin of more sophisticated attacks, but it remains surprisingly effective. It involves someone physically observing you as you type your password – whether standing behind you in a coffee shop, sitting next to you on a train, or watching from across a conference room.

With smartphone cameras capable of recording in 4K, an attacker does not even need to be directly behind you. A well-positioned recording device can capture keystrokes from several meters away. In corporate environments, security cameras and reflective surfaces can inadvertently make passwords visible.

Shoulder surfing is often dismissed as a minor threat, but it is frequently the entry point for more targeted attacks. An attacker who observes your phone unlock code can later steal the device and access everything on it, including your password manager if it uses the same code for authentication.

How to Defend Against Shoulder Surfing

• Use biometric authentication (fingerprint or face recognition) when available in public spaces
• Position your screen away from onlookers when entering sensitive information
• Use a privacy screen filter on your laptop and phone
• Avoid entering passwords on public Wi-Fi networks where others are nearby – or use autofill so you never visibly type credentials
• Be aware of your surroundings, especially in crowded public places

6. Social Engineering

Social engineering is the art of manipulating people into revealing confidential information. Where phishing typically happens through email, social engineering can occur over the phone, in person, through text messages, or via social media. It exploits human psychology rather than technical vulnerabilities.

Common social engineering tactics include:

• Pretexting – the attacker creates a fabricated scenario to justify their request. “Hi, this is James from IT. We are migrating servers tonight and need to verify your login credentials to ensure your account transfers correctly.”
• Baiting – leaving infected USB drives in parking lots or common areas, labeled with enticing names like “Q4 Salary Review” or “Confidential”
• Quid pro quo – offering something in exchange for information. “I can fix that computer issue for you, I just need your password to access the system.”
• Tailgating – physically following an authorized person through a secured door to gain access to a restricted area

Social engineering attacks are effective because they target the weakest link in any security system: human trust. Even security-conscious individuals can be caught off guard when the scenario is convincing and the pressure is immediate.

How to Defend Against Social Engineering

• No legitimate organization will ever ask for your password – if someone does, it is a red flag regardless of who they claim to be
• Verify requests through a separate channel – if “IT” calls asking for credentials, hang up and call the IT department directly using a known number
• Be skeptical of urgency – attackers create time pressure to prevent you from thinking critically
• Limit the personal information you share on social media, as attackers use it to craft convincing pretexts
• When in doubt, slow down and consult someone you trust before acting

7. Data Breaches

Data breaches are the wholesale compromise of user credentials from a service’s database. When a company suffers a breach, the stolen data often includes usernames, email addresses, and passwords – sometimes in plaintext, sometimes hashed with varying levels of protection.

The scale of modern data breaches is staggering. The 2013 Yahoo breach affected all 3 billion user accounts. The 2019 Collection #1 leak exposed over 773 million unique email addresses alongside 21 million unique passwords. These databases circulate on dark web marketplaces and hacking forums, available to anyone willing to look for them.

Even if a breached service stored passwords using hashing and salting, weak passwords can still be recovered. A short or common password hashed with SHA-256 can be cracked in seconds using rainbow tables or GPU-accelerated tools. Only long, truly random passwords survive intact after a breach.

Our list of the most common passwords shows exactly which credentials appear most frequently in breach databases – and if yours is among them, it is already in every attacker’s dictionary.

For more on how breaches happen, how stolen data spreads, and what you should do when your information is compromised, see our data breaches guide.

How to Defend Against Data Breaches

• Use a unique password for every account so that a single breach cannot cascade across your digital life
• Choose passwords that are long and randomly generated – they are far more likely to survive even if the password database is stolen
• Monitor breach notifications and change compromised passwords immediately
• Use PanicVault’s password audit feature to check your stored credentials against known breach databases
• Enable two-factor authentication on every account that supports it

The Bigger Picture

These seven methods do not exist in isolation. Attackers frequently chain them together for maximum impact. A data breach provides the credentials for credential stuffing. A phishing email installs a keylogger. Social engineering extracts just enough information to make a phishing attempt convincing. Understanding each method individually helps, but recognizing how they combine is what separates someone who is merely aware from someone who is genuinely protected.

The common thread across every defense listed above is this: no single measure is sufficient on its own. Effective password security is a system built on multiple layers.

Your Defense Checklist

Here is a practical summary of the defenses that protect against all seven attack methods:

1. Use a password manager. Generate a unique, random password for every account and store them in an encrypted vault. PanicVault uses the open KeePass format with AES-256 encryption, keeping your credentials under your control with no subscription required.

2. Create a strong master passphrase. Your one memorized password should be a randomly generated passphrase of 5 or more words. See our strong password guide for step-by-step instructions.

3. Enable two-factor authentication. Add a second verification step on every account that supports it. Hardware security keys and authenticator apps are the strongest options. See our two-factor authentication guide.

4. Stay skeptical. No legitimate service will ask for your password via email, phone, or chat. Verify requests independently before acting.

5. Keep software updated. Patches close the vulnerabilities that malware exploits to install keyloggers and credential stealers.

6. Monitor for breaches. Use services like Have I Been Pwned and your password manager’s audit tools to stay ahead of compromised credentials.

7. Use a password manager with autofill. Beyond convenience, autofill protects against both phishing (wrong domain detection) and keyloggers (no keystrokes to capture).

The methods hackers use to steal passwords are well-documented and widely deployed. But so are the defenses. The difference between a compromised account and a secure one almost always comes down to whether the account holder had these basic protections in place. With the right tools and habits, you make every one of these seven attack methods either ineffective or irrelevant.