Savers are being spared just 8p in tax for every £1,000 they have in some Isas at big banks.
Cash Isas were once the most popular and easily-understood savings accounts. You put in a limited amount each tax year steadily building up a nest-egg year by year, and your interest is automatically tax-free.
But pitifully low interest rates and the new tax-free personal savings allowance have dampened their appeal.
Pitifully low interest rates and the new tax-free personal savings allowance have dampened the appeal of cash Isas
The past 12 months has been the worst year since cash Isas were introduced in 1999 for some savers.
For example, your £1,000 in the NatWest Cash Isa earned just 38p, down from £1.52 in the previous year.
That means you’re saving just 8p in tax. The bank paid 0.01 per cent for eight months and 0.1 per cent for the other four.
Those in the popular Halifax Instant Saver earned just 98p, down from £1.90, giving a 20p tax saving.
The introduction of the personal savings allowance in April 2016 has tarnished the shine on cash Isas.
The allowance gives basic rate taxpayers the first £1,000 in interest from ordinary savings accounts tax-free.
You can have £70,000 in the best easy-access ordinary account with a rate of 1.35 per cent and pay no tax on your interest.
Higher rate tax payers have a £500 allowance. The hike in the amount you can put into a cash Isa each tax year which ends on April 5 has also played a part.
With a high limit of £20,000, few savers need to rush to take out an Isa — if they miss out this year, they have another £20,000 from next tax year starting on April 6.
Last tax year (2016 to 2017) the average sum put into a cash Isa was £4,622.
Back in the tax year 2012-2013, the limit was a much lower £5,640. Then 11.6 million savers opened an account with an average £3,501.
The top easy-access rate was 3.5 per cent, giving a £7 tax saving for basic rate payers on each £1,000.
It was more worthwhile because there was no personal savings allowance, and savings interest outside an Isa was automatically taxed.
Now the top easy-access rate is 1.25 per cent — giving just a potential £2.50 tax saving which you could more than likely get through your personal savings allowance.
Last tax year the number of savers opening a cash Isa dropped to 8.5 million. But experts still advise using cash Isas over ordinary savings accounts.
They argue that when rates finally start to rise, your £1,000 or £500 personal savings allowance will be eaten up more quickly and you could end up paying tax on your savings in years ahead.
And they warn the personal savings allowance could be cut in the same way as the dividend allowance, which falls to £2,000 from £5,000 next tax year.
The top easy-access rates come from Paragon Bank and Shawbrook bank at 1.25 per cent. Nationwide pays a higher 1.3 per cent on its Single Access Isa, but you are limited to only making one withdrawal a year.
On fixed-rate deals top rates include 1.47 per cent for one year from Oaknorth Bank or 1.67 per cent for two years from Principality BS, Paragon Bank and Charter Savings Bank.
You can put up to £4,128 into a Junior cash Isa for the under 18s this tax year.