While a number of homeowners have switched to tankless water heaters to save on energy bills and storage space over, there are certain benefits to tank c based models. In choosing a new water heater, you might be thinking to choose between traditional and tankless and of course, it’s your choice to pick which one best suits your needs within the home. Like most major home improvement decisions, there are certain advantages and disadvantages to each choice.

So which water heater is better? Tankless or traditional?

Well, that’s for you to decide. Like most purchases, there are trade-offs. To make an educated decision, we’ve created this buyer’s guide to help you:

  • Understand the differences between tankless and traditional water heaters
  • Learn the pros and cons of tankless and traditional water heaters

What’s the difference between a traditional and tankless water heater?

A traditional water heater stores and preheats 30-50 gallons of water in a tank. That preheated water is used whenever someone showers, does the laundry, or washes dishes. The tank then refills to be reheated once again.

A tankless water heater uses a heat source (electric or gas) to warm up cool water on-demand whenever you need it rather than storing hot water in a tank.

Pros and Cons of Traditional Water Heaters


  • Lower initial cost – A traditional water heater installation can be half as much as a tankless water heater.
  • Easy and inexpensive to replace – Less installation complications means that there’s less that can go wrong.


  • Higher utility bill – They heat and reheat water at a pre-set temperature regardless of your water needs. This increases your utility bill—especially during the winter winter.
  • Bigger and harder to place – They occupy more room and can’t be placed outside.
  • Can run out of hot water – Ever been the last in your family to get the shower? It’s a chilling experience. This problem can be avoided by purchasing a larger tank (althought that will be more in energy costs, as well.)
  • Shorter life – Lasts 10-15 years. This means there’s more turnover and therefore you have to buy them twice as often as a tankless water heater.

Pros and Cons of Tankless Water Heaters


  • Saves money in the long run – According to Energy.gov, “For homes that use 41 gallons or less of hot water daily, demand (or tankless) water heaters can be 24%–34% more energy efficient than conventional storage tank water heaters.”
  • Doesn’t take up much space – They are small and can be installed in more places—even outside on a wall.
  • Lives longer – Lasts 20+ years. Almost double a traditional water heater’s life.
  • Delivers hot water on demand – Provides two to three gallons of hot water per minute on demand.


  • Higher initial cost – Costs $2800 to $4500 installed (depends on the model and who you get it from).
  • Retrofitting adds to upfront cost – Replacing a traditional water heater with a tankless system is more complicated. So that increases the installation cost even further.

Which water heater should I choose?

In the end, pick the type of water heater that will best fit your lifestyle, budget, and water usage on a monthly basis. If your comfortable with higher initial costs tankless heaters will save you money in the long run. 

According to Energy.gov, an Energy Star tankless water heaters can save you about $100 annually.

So if you can handle the high initial costs, you can save more money in the long run by switching to tankless. Tankless can also be a good choice for large families because you have more people consistently using more hot water.

However, a traditional water heater may make more sense if you are on a limited income and need a quick replacement.