Did you know that as much as one-fourth of the energy used in your home is consumed by your water heating system? That makes choosing the right system extremely important to your bottom line.

These days, however, this is no simple task. “If you haven’t replaced your water heater in a few years,” notes Consumer Reports, “you’ll discover that you have more choices than before so it’s worth doing your homework.”

One of the biggest debates is whether to buy a storage-tank or tankless water heater. Below, we offer the pros and cons of both:

Storage-tank heaters:

In this system, cold water flows into a tank, where it is heated by gas or electric power. The heater cycles on and off to maintain the temperature. As hot water is used, more cold water flows into the tank to be heated.

Pros: They can store up to 80 gallons of water – plenty to cover multiple uses at one time. Modern tanks also reheat the water quickly, making it unlikely you’ll run out of hot water.

Cons: it’s inefficient and costly to keep a tank of water heated when hot water isn’t needed. Also, tanks can fail: Should your tank leak, you can end up with 80 gallons of water on your floor and distressing water damage to nearby possessions.

Tankless Water Heaters:

Here, water isn’t stored in a tank, but heated on demand, once the faucet is turned on.

Pros: You avoid the risk of tank failure, and you’re not spending money heating water when it’s not needed. Also, while most tank water heaters last 10-15 years, the lifespan of tankless water heaters can be up to 20 years. Additionally, these models are much smaller than traditional tank heaters, taking up less space.

Cons: While tankless systems can save in energy costs over time, they are more expensive than storage-tanks up front and require a yearly flushing by a professional in order to achieve a long lifespan. Also, water temperature can fluctuate, and the system isn’t good at providing hot water for simultaneous uses (i.e. shower, laundry and dishwashing).