Personally I always convert it if possible.
My order is usually:

Convert
Seal hand-in (unless seals are full)
Desynth
Sell to NPC (Only works if it's "bound" so I cannot sell it on MB and don't want to keep it for leveling)
Discard (when I'm too lazy and it's "bound)

I never keep anything for leveling unless it's a rare dungeon drop because who cares, and also materia goes for a lot on MB always. Remember you cant sell bound items on the marketboard, so if you've used it even once during a battle it won't be able to sell there.