When the financial experts talk about getting out of debt and staying out, they often talk about cutting up the credit cards for good.   They talk about only buying things with cash.

They talk about the envelope system for budgeting and how to reserve hotel rooms and rental cars without a credit card.

And then there is a whole other approach to credit: Folks who use their credit cards for everything in order to earn credit card rewards.  They always pay their credit card bills in full each month so they never carry a balance.

But which is better: Cash or credit?

The case for cash

They say cash is king and there’s a reason.  It’s readily available, accepted everywhere and impossible to spend more than what you have.

When you run out of cash, you can’t spend any more and that is incredibly helpful for those who may have a problem with compulsive shopping.   Most people who use cash to do all their shopping find that they spend less than if they used a debit or credit card.

Debit cards work the same way.  Because a debit card is tied to your checking account,  you get the convenience of swiping a card with the knowledge that you can’t spend more money than you have in your account.

Money bummer

The downside to cash is that it can be easily lost or stolen, and once it is gone, it’s gone.  If you’ve ever messed up the math you did in your head while you shopped for groceries and had to decide what items to remove from your cart because you don’t have enough money, you know that buying only with cash can sometimes be inconvenient.

Debit cards make shopping with cash more convenient, but they lack the protections that credit cards do.  If your debit card is lost or stolen, thieves can easily drain your bank account and you’ll have to suffer the consequences.

When credit is good

Credit cards are convenient, easy to use, and often come with lucrative rewards.  Credit cards often come with protections that aren’t available to users for cash.  For example, if someone steals your credit card, you are not liable for charges they make.  Some credit cards provide travel and car rental insurance.   And others offer price guarantees so if the item you bought is found at a better price within 60 to 90 days of purchase, you are rewarded with the difference.

When credit is bad

If you cannot pay your credit card balance in full each month, it can be expensive and disastrous to your finances.  Most credit cards charge interest rates of 18 percent or more, and that can make credit card debt grow quickly.

Because credit is so easy to use, it can be very hard to say “no” to purchases.  It is especially dangerous to those who may be compulsive shoppers.

My approach to cash and credit

I recently listened to a conversation Mark and Lauren Greutman of the Simpler Happier Life Podcast had about using credit cards.

They had worked hard to pay off all of their credit card debt and had sworn off using credit cards for quite some time.  And then they decided that they wanted to try using credit cards again to “travel hack.” They wanted to earn free hotel stays and flights by using their credit cards to earn rewards and then paying them off in full each month.

After several months of using credit cards, they decided it wasn’t for them.  While, they were able to earn some nice rewards,  they struggled to keep tabs on their expenses and worried about sliding on a slippery slope back into debt. For them, it made a lot of sense to go back to cash.

I know many people can relate to their experience, and for those folks, avoiding credit is the best solution. But I’m a little bit different.

While I do use some cash, I tend to lean on debit and credit cards more.  I know this approach goes against most of the debt slayers out there, but I have found that for whatever reason, I simply cannot hold on to my cash.  I almost always fritter it away.

I religiously track my credit and debit card spending with You Need a Budget (YNAB)¤ and can easily tell you how much I have in my checking account and how big my credit card balance is.  But I have a much harder time keeping track of my cash.

Whenever I have cash I am more likely to forget to get a receipt for my purchases or, for some reason, I lose the receipt.  My spare change and small bills end up in every crevice of my purse, pockets and car.  I find that when I use cash, I make more excuses for bad purchases.  I am more likely to pick up a soda at the gas station or hit the drive-thru for a sandwich if I have cash because I don’t have to take the time to write in my checkbook register.

I love the convenience of swiping a card and the ability to better track my expenses.  I love that I earn rewards from my credit card and I like the consumer protections my credit card offers.

Since I have never, ever carried a balance on my credit cards, I have found that I save money when using credit cards.

So which is better: Cash or credit?

The answer to whether it’s better to stick to cash or to use credit depends on you and your temperament.  If you are a person who likes to buy now and think about how to pay for things later, you will probably do much better on a cash diet.  If you are 110 percent committed to paying off a credit card balance in full each month, then you may choose to use the benefits that a good, annual fee-free credit card can provide.

Ultimately, you have to figure out what works best for you.  The quicker you figure that out, the faster you can turn around your personal finances and get rid of debt for good.

Your turn:  What’s your approach to money? Do  you only use cash? Or do you prefer to use credit?

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