NEW YORK (MainStreet) — When it comes to personal finance, there’s perhaps no bigger divide than the question of all cash versus no cash. Sure, you’re going to need to use cash sometimes and need to use a card other times. But the basic question over which is the best way to use your money is a hotly debated topic. We assembled a panel of experts and got their take on the question to help you make the right decision for you and your family.

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The Case for Cash

Cash is preferable, because you can only spend what you have, according to Elle Kaplan, CEO and founding partner of LexION Capital Management. “The average American has over $7,000 in credit card debt,” she says, adding “that’s over $850 billion in credit card debt as a nation.” She considers this proof that most consumers just aren’t disciplined enough to make the switch over to cards. Hence her advocacy for the cash-only diet.

Kaplan’s solution to the credit crisis: head down to the ATM at the beginning of the week and take out all the cash you’re going to need for the week. When it’s gone, it’s gone. No extra trips to the ATM or using your debit card to make up the slack. In fact, she advises you to keep your credit and debit cards at home so that you can’t even use them. “You carry cash and that’s it,” she says.

Another benefit of the cash diet? “If you go out to dinner, it can be a lot easier to split up the bill,” she says.

Kaplan says that debt is the biggest reason for people to avoid the plastic. “Are you currently in credit card debt? If so, go on the cash diet," she says. "If not, but you have been in the recent past and aren’t sure if you trust yourself, the cash diet might also be for you.”

The Case for Cards

Credit cards do offer advantages in security.

“Carrying a card is much safer than carrying cash,” says Randy Hopper, vice president of credit cards with Navy Federal Credit Union. “In the event that you lose your wallet or purse and someone else uses your card, it’s a lot easier to get that money back than it is to recover a large sum of cash.”

Matthew Goldman, CEO of Wallaby, a company that makes an app to help people maximize their credit card rewards points, concurs.

“If you lose $100 in cash, it’s gone," he said. "If you lose $100 on a gift card, you can always get that recovered.”

He also points out another area where you have greater security with a card than you would with cash: merchant disputes on your credit card.

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Of course, Goldman also touts the rewards potential of using credit cards over cash. “Rewards points offer a huge advantage,” he says. Hopper also raised rewards points as a reason to prefer plastic over paper. “If you’re filling your tank up with $50 of gas, why not get 75 cents back from that purchase?” he asks. It might not be a lot of money, but it adds up over time and besides -- would you pick it up if it were lying on the ground?

A final perk of plastic is that it can make it far easier for you to budget. “It’s good to use cash in the confines of going to events,” Hopper says. “In general, it can be harder to manage your budget as you become a more complex consumers.” Credit and debit cards, Hopper argues, can be a means to manage that budgeting concern.

Goldman adds that it’s also very easy to port your information into budgeting apps so that you can see where your money is going when you’re using plastic -- much easier than when you’re using cash.

In the final analysis, however, whether or not you use paper or plastic is largely a function of your own needs and fiscal discipline. “Discipline is hard,” says Kaplan. “We can all be tempted by things. That’s why if you carry credit card debt, you carry the risk of getting into more debt, a cash diet is a very good way to do this. You carry cash, that’s it. It’s very easy, black and white — you either have cash or you don’t.”

--Written by Nicholas Pell for MainStreet

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