As a nation, we have our favourite ways to go about our daily lives. But none are as detrimental as the often unchallenged way to save for our retirement, house purchase or rainy day fund.

Our psyche around savings is centred on the infallible Individual Savings Account. But the fact remains that they are pointless for the vast majority of Britons – and using one could even be a detrimental decision.

For most savers, unless investing vast sums in stocks and shares, an Isa will result in lower returns than an ordinary savings or investing account. It is simply a cloak of invisibility which hides your savings and gains from the taxman. But, it’s only worth having if the amount of tax you save is more than the premium you pay for such a magic cloak.

More than four million people use cash Isas even though their income is below the threshold to pay any tax on the earned interest. Suppose you put the maximum £20,000 into a one-year fixed rate Isa, as I write the best is Castle Trust Bank which pays 0.96pc, according to Savings Champion, a comparison site. This will bring in £192 in the year free of tax. But away from Isas you can get a 1.37pc account with Zopa that will pay £274 in interest – £82 a year more than the Isa. Even if you end up paying tax, you’ll earn £205.50 as a basic rate payer – still £13.50 more.

This is before we consider savers can earn £1,000 or £500 in interest without paying tax because of the personal saving allowance. A basic rate taxpayer would need nearly £73,000 in the one-year bond before paying tax and a higher rate taxpayer would need £36,500. The average value of a cash Isa is just £11,223.

Only those who earn more than £150,000 are better off using a cash Isa, but even then they would be better off putting £50,000 into premium bonds. Counting just the £25 prizes they will win on average, they’ll earn 0.85pc tax-free.

The disadvantages don’t stop there. Isas’ fallibility continues with other types of accounts such as those for children and for investors. The best junior ash Isa pays 2.5pc but the highest-paying non-Isa offers 3.5pc. Given the maximum annual subscription to a junior Isa is £9,000 a year, the best non-Isa will earn £90 more.

Investment Isas are also a waste of time for most. Everyone receives £2,000 dividend allowance so for the cloak to be worthwhile, income must exceed that. Suppose your investment tracks an index that yields 3.6pc a year charges are 0.76pc, to use up your £2,000 tax free allowance would require around £70,000 invested – rather more than the £61,707 in the average stocks and shares account.

Of course Isas also protect you from capital gains tax. However, given you have an annual £12,300 allowance before paying any duties, the average £61,707 Isa would have to return 20pc in a year. Rather higher than 5pc long-term average return from stock markets.