A new report suggests that more people are choosing to save their cash in Isas, with a record number of the tax-free savings accounts being opened last year.

The figures, which have been published by market analyst Datamonitor, show that 13,788 Isas were opened in 2006 and that a total of £33.3bn was paid into both new and existing accounts.

Savers continued to favour mini cash Isas that can receive £3,000 a year, which the report shows are the most popular type of account.

However, although their sales have risen by 6.5% since 2002, the average amount which is invested in them has remained static at around £2,178.

However, maxi Isas, which invest money in stocks and shares, were found to be less attractive to savers. Both the number of new accounts opened and the amount invested in them was lower last year than it was in 2002.

And Datamonitor's report predicts that a stock market correction in the near future will affect sales of maxi Isas further as consumers become increasingly wary of investing in equities.

Report author Katie Langridge said: "Despite the current promise of the Isa market, it will over the next five years be hit by a stock market downturn, which will damage sales of the stocks and shares versions of the product.

"However, the cash form of Isas should continue to do well and may even benefit from investors' reluctance to invest in stocks and shares, as the overall Isa market is forecast to grow by 4.6% to 2011."

Datamonitor said it also expects the market for savings products offered by banks and building societies to continue to grow during the coming five years from being worth £834.4bn at the end of 2006 to £1.183 trillion by 2011.

The group said banks and building societies are also becoming more competitive in the interest rates they offer, but at the same time they are increasingly adding catches to accounts, such as requiring customers to open uncompetitive accounts alongside them, or deposit a minimum amount each month.

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