Since 1999 when ISAs were introduced, savers have received £75bn in interest. But less popular stocks and shares ISAs have performed considerably better, achieving returns of £202bn via the FTSE All-Share Index.

Analysis from Scottish Friendly and the Centre for Economics and Business Research (CEBR) revealed that a cash saver using their ISA allowance each year since 1999 would have achieved around £20,628 in tax free interest.

But this is less than a third of the £70,987 an investor would have achieved from a stocks and shares equivalent.

Despite the difference in returns, UK savers are shown to be reluctant to ditch their cash ISAs in favour of stocks and shares.

A Scottish Friendly survey of 2,000 people revealed that 40% have a cash ISA, but just 18% pay into an investment ISA.

For a quarter, the reason is that they don’t fully understand how to invest, while a fifth said they’re afraid of losing money.

Calum Bennie, savings specialist at Scottish Friendly, said: “Thousands of people across the country are probably thinking they are doing the sensible thing by saving into a cash savings account for their future. But many of them will not know that the value of their cash is being eroded in real terms due to the toxic combination of pitiful savings rates and rising inflation.

“So the message to savers is clear: keep an adequate amount of money in an easy access cash account in case of emergencies, of course, but if you’re saving for your future then investing can offer potential for greater returns. The issue is many people are either afraid to make that first step into investing or have no idea how to invest.”

For top first-time investing tips see: Route to riches? Getting started in investment