Where can an API Token for Terraform Cloud or Terraform Enterprise be stored?

The correct choice highlights that API tokens for Terraform Cloud or Terraform Enterprise can be securely stored in the credentials.tfrc.json file. This file is specifically designed for managing authentication credentials in a structured, JSON format, allowing Terraform to easily access sensitive tokens without hardcoding them into configuration files or exposing them through environment variables.

Using the credentials.tfrc.json file is advantageous as it provides a dedicated location for storing credentials, separated from the general Terraform configuration. This practice enhances security and maintainability, ensuring that sensitive data is handled appropriately. The structure of this file also allows for multiple credentials to be stored and accessed conveniently, which is useful in environments with multiple workspaces or configurations.

Environment variables offer a means to store tokens, but they can be less manageable and might be exposed in certain situations, such as in logs or when handling processes across different environments. Storing tokens directly in the terraform.rc file is not the recommended approach due to potential readability and security concerns. Lastly, keeping API tokens within the main Terraform configuration file is not advisable, as this increases the risk of accidental exposure when sharing configuration files or versioning them in repositories.