Well, nothing beats separate servers IMHO but that's not always an option. For example, we provide shared hosting for some customers and obviously they need to have their data isolated from each other while being on the same server. We achieve this with strictly-enforced permissions on the users' files. Each user only has read access to their own files, not those of any other user. You could set up the same, at least for the credential-filled file. Just ensure that the untrusted dev user has no permissions to access the live file (ideally the whole live tree) and that's all you need.
For configuration variables in our own sites (not customers) we tend to use environment variables declared within the webserver conf (which is itself unreadable by the normal users). This keeps the per-site filesystem clean and means that we don't need to take care with that when deploying in-site code between dev and prod. It's a bit more of a faff to do this for the customers and they have less need - most don't bother with a dev environment hosted with us.
HTH.
🦛
In reply to Re^3: Holding site variables
by hippo
in thread Holding site variables
by Bod
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