Securing passwords xtrabackup

I read that some people are using the extra defaults file for passwords and some are specifying it in the defaults file. I need to specify a defaults file, but I also want to specify an extra defaults file for the login and password. Is that possible?

No, but you can use a seperate defaults file for xtrabackup that contains the username/password. If your regular defaults file changes often, you can create a simple script that adds the username/password to that file and writes it in a secure location.