A third of the UK adult population has saved more than £172billion into cash ISA accounts according to Consumer Focus, but the average interest rate has plummeted to less than 0.5 per cent.

Are you losing out by saving into one of these accounts? Did you subscribe your whole cash ISA allowance into an account with a bonus rate? Have you checked the interest rate you are earning in your cash ISA lately?

These are all questions that Consumer Focus is urging you to ask following the launch of their ‘super-complaint’ into cash ISAs last year. As part of its research, Consumer Focus found that 30% of cash ISA savers view their ISA as an alternative to a pension, meaning that short-term accounts with ‘teaser’ bonus rates may not be appropriate.

But there are alternative cash ISA options available, provided you are prepared to lock your money away for a fixed period of time. Medium to long term fixed rate bonds with terms of three or more years tend to offer the most competitive interest rates on the savings market, and this is also the case for fixed rate cash ISAs – it also means you do not have to worry about checking the interest rate every 12 months.

Alternatively, if you are looking for something a bit different, with the potential for considerably higher growth returns, you could look at structured deposit plans that are available within your cash ISA wrapper.

These plans work by protecting your initial deposit, but any stated returns are dependent on the performance of an index such as the FTSE 100. Plans are usually for a fixed period of between three and six years, and range from income plans like the 5 year Investec FTSE 100 Income Deposit Plan (currently offering the potential to return 4.60% a year) to growth plans like the Investec 5 year Deposit Plan, which currently offers a target return of 35% after 5 years provided that the FTSE 100 index is higher than its starting level after 5 years.

If you view your cash ISA as a long term savings solution, or are one of the 30% that sees them as an alternative to a pension, structured deposit plans can offer the protection normally associated with a bank or building society account, with the potential for returns linked to the stock market.      

See structured cash ISAs for more information