The websites we use do not guard our passwords securely. So, it is good practice to use a different password for each website. But, it is truly impractical to remember that many passwords. So, the solution is to use a password generator. It typically uses a master password to generate custom passwords for each domain. So, even if the password at one of your websites is compromised, that password is useless for the thief since he cannot use it anywhere else.
The password generator that I have started to use is SuperGenPass. Given a master password, it uses that to generate a custom password for every domain that you login to. It is available as an extension for Chrome here.
Using it is simple. Head over to Extensions, find SuperGenPass for Google Chrome and choose Options. Type in a master password, choose a length (typically 10) and give this password profile a nickname. It will be assigned a digit. For example, the first one you create will be 1.
Now whenever you open a login webpage on any website, SuperGenPass is activated. When you switch to the password field, SuperGenPass will show you the master passwords available and their digits. Type the digit and SuperGenPass will fill in the custom password it generated using that master password and the domain of the website.
The first time you change your password on a website from your old one to one that is generated by SuperGenPass, you will need to use the above procedure.
Tried with: SuperGenPass for Google Chrome 5.0 and Google Chrome 20.0.1132.47