Powershell: Using Secure String in scripts

First create a key which will be used to encrypt the plain text password

Create key

$Key = New-Object Byte[] 16   # You can use 16, 24, or 32 for AES
[Security.Cryptography.RNGCryptoServiceProvider]::Create().GetBytes($Key)
$Key | out-file ".\key"

Now, use the key to save encrypted password to disk

Create password

param (
    [Parameter(Mandatory=$true)][string]$Password = $( Read-Host "Input password, please" )
 )
$Key = Get-Content ".\key"
$Password | ConvertTo-SecureString -AsPlainText -Force | ConvertFrom-SecureString -Key $key | out-file ".\pwd"

And finally use the key to get the password from disk and create credentials with it.

Convert to credential

$Key = Get-Content ".\key"
$User = "CONTOSO\someuser"
$Pass = Get-Content ".\pwd"
$MyCredential = New-Object -TypeName System.Management.Automation.PSCredential -ArgumentList $User, ($Pass | ConvertTo-SecureString -Key $key)

Key is used so any user can decrypt the password. If no key is used, the string value produced is bount to the current users GUID