The number of people saving into a cash Isa this year is set to fall by 9%, with just over half of Britons (54%) planning to put money into one, according to a consumer survey.
One in ten (11%) say it is not worth putting money aside because of low interest rates, while one in five (19%) say they can't afford to save into an Isa.
More than four in ten (43%) say they are now using their current account as their main way of saving as savings rates on current accounts have risen due to greater competition.
Those who are saving, plan to set aside £121 less in their cash Isa this year - only 38% plan to use their full Isa allowance. uSwitch, which carried out the survey, says that by failing to take advantage of the cash Isa allowance Britons will lose out on £191 billion in tax-free savings.
Just over half (54%) of Britons plan to save into a cash Isa this tax year - compared to 63% last year. While the base rate has remained at a historic low, the average cash Isa rate this year has fallen - down to 1.64% from 1.87% this time last year.
Fewer than four in ten people (38%) are intending to take full advantage of their allowance of £5,760.
uSwitch says that some 23m UK adults are failing to benefit fully from the tax-free allowance. What's more, less than four in ten (37%) savers are planning to increase their contributions to match next year's new Isa limit of £5,940.
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Despite the fact that fewer consumers are saving into a cash Isa, over a third (34%) of consumers recognise it's important to take advantage of the full allowance. As a result, three quarters of Britons (75%) are willing to make sacrifices to utilise their Isa allowance, with 10% prepared to sacrifice a holiday and a fifth (19%) happy to cut out daily luxuries.Over a fifth (22%) would sacrifice a new car or home improvements in order to save the full amount.
Jafar Hassan, personal finance expert at uSwitch.com, says: "This Isa season is yet again proving to be a damp squib, with dismal rates unlikely to spark a fire under savers.
"Unfortunately we haven't seen the usual battle between banks and building societies to offer the best rates and lure savers, and as we near the end of February far fewer new cash Isa savings accounts have been launched compared to previous years. To make matters worse, many of the top deals on both cash Isas and taxable accounts have disappeared in recent weeks - the Post Office has closed its Premier Cash Isa to new savers and Virgin Money has cut the rate for new savers on its Cash Isa.
"Luckily, current accounts are offering consumers a lifeline. With rates of up to 5%, it's no surprise that savvy savers are turning their backs on Isa and putting any money they can into a current account, where it will work much harder for them."
Research was carried out online with the uSwitch.com Consumer Opinion Panel in January 2014 among a sample of 1,613 GB adults.