Cash · Bank-side pair
Cash is not one bucket. A high-yield savings account is Tuesday money — job-loss, deductible, dead transmission. A CD is dated money you can actually leave until maturity. A money-market deposit account is still a bank deposit. A money-market fund is not. Google “best cash rate” treats them as flavors of 4%. They are a fork. The Treasury-side pair (I-bonds, T-bills) lives in a different primer.
Updated 2026-09-09 · 10 min read · Educational, not tax or deposit advice. Rates below are examples, not today’s bank or today’s auction. Type yours in the I-bond vs T-bill vs HYSA calculator.
| HYSA | Bank CD / share cert | Money-market account | Money-market fund | |
|---|---|---|---|---|
| Job | Tuesday money | A known date | Checking-adjacent cash | Brokerage sweep / parking |
| Insurance | FDIC / NCUA $250k | FDIC / NCUA $250k | FDIC / NCUA $250k | Not FDIC. Rule 2a-7. SIPC is the broker, not the $1.00. |
| Liquidity | Same day / few days | Maturity, or a penalty | Usually same day | Trade date; government MMFs usually next-day cash |
| Early-exit cost | None | Disclosed days of interest (12 CFR 1030) | None typical | Price / liquidity fee on some non-government funds |
| Rate | Bank can change APY tomorrow | Locked for that term | Variable | Variable; 7-day yield is not an APY promise |
| 1099 | Box 1, state yes | Box 1, state yes | Box 1, state yes | Dividends; state usually yes. Treasuries in the fund can be a mix. |
People google “HYSA vs money market” and pick a nickname. The insurance line is the product. If the statement says “fund,” it is not a savings account. If it says “deposit,” it is.
Worked slice
Example APYs, not today’s quotes: HYSA 4.10%, 12-month CD 4.40%, T-bill 4.00%, example state 9.3%. HYSA interest $1,025 → tax 31.3% → net $704 (2.82%). CD interest $1,100 → net $756 (3.02%). You locked a year for $52. T-bill skips state tax: net $780 (3.12%). Same $25k in a no-income-tax state: HYSA net $800, CD $858, T-bill still $780 — the exemption is the whole story, not a slogan.
The usual “no”
Same $25,000 CD, example 90-day interest penalty (Truth in Savings requires the bank to disclose its number). Six months of CD interest is $550. Penalty ≈ $271. You keep about $279 before tax. The HYSA over the same six months is $513. A CD that you might break is a HYSA with a fee attached. Dated money only.
Bank interest is ordinary income. Form 1099-INT box 1 for HYSA, CD, and money-market deposit accounts. States with an income tax usually follow. Treasury interest is box 3 — still federal ordinary, not state (31 U.S.C. § 3124). I-bond interest can wait until you redeem. That is why a 4.00% T-bill beat a 4.10% HYSA in the high-tax slice above, and lost in the zero-state slice.
Do not scrape a comparison-site “best HYSA” into this page as if it were the rate forever. Variable APYs move with the Fed. CDs lock a term. T-bills lock a tenor. Type the three numbers you can actually get this week into the calculator. Defaults on that tool are labeled examples, not today’s auction.
The standard maximum deposit insurance amount is $250,000 per depositor, per FDIC-insured bank, per ownership category (12 U.S.C. § 1821(a)(1); FDIC “Your Insured Deposits”). NCUA uses the same dollar as the standard maximum share insurance amount (12 CFR 745). Single accounts at one bank are added together. A two-person joint account is typically $500,000 at that bank ($250k per owner). IRA deposits are a separate category. Trust accounts changed April 1, 2024: a maximum of $1,250,000 per owner at one bank when there are five or more beneficiaries. Run large piles through EDIE. Two logins at the same charter are still one bank.
What is not FDIC: brokerage money-market funds, Treasuries you hold, I-bonds, stocks, crypto, the contents of a safe-deposit box. A “cash sweep” at a broker is only insured if it is actually sitting in an FDIC-insured deposit program — read the sweep fact sheet, not the app icon. SIPC covers missing securities if the broker fails (generally $500,000, including $250,000 cash). It does not make a fund’s $1.00 a government guarantee.
Rule 2a-7 (17 CFR 270.2a-7): a government money-market fund invests 99.5%+ in cash, government securities, and fully-collateralized repos, and is exempt from the liquidity fees that can apply to other MMFs. Extremely conservative. Still not a savings account.
Truth in Savings (12 CFR 1030.4) makes the bank disclose the annual percentage yield and, for time accounts, the early-withdrawal penalty and how it is calculated. Typical retail CDs take 60–365 days of interest; longer terms take more. The penalty can eat principal if you have not earned that much yet. Brokered CDs usually have no “break” button — you sell at a market price, which can be a loss if rates have risen. Callable brokered CDs can also be taken from you when rates fall. If you cannot name the date, you wanted the HYSA.
The old Regulation D six-convenient-withdrawal cap on savings was removed in April 2020. Banks may still write transfer limits into the deposit agreement. That is a bank rule now, not a Fed quota. It is not a reason to move the emergency fund into checking “so you can use it.”
Chasing the top HYSA every month costs failed transfers and a week where the payday+1 ACH did not fire. A good-enough FDIC rate with automatic rules beats a perfect rate you babysit. Promo APYs that last 90 days and then drop to 1% are a CD you did not agree to. Bonus offers that require a new direct deposit are a job, not a 15-basis-point raise.
Inflation is the other tax on cash. A 4% HYSA in 3% inflation is a small real return after tax, not a wealth engine. That is a purchasing-power problem, not a reason to put Tuesday money in an index fund.
Free tool
User-entered composite / APY / discount, $10k cap, 12-month lock, 3-month penalty, state-tax toggle, bars, shareable URL. Defaults are examples.
PayPal
12 steps: split Tuesday money from dated cash, cap calendar, T-bill ladder, tax lot at redemption.
Bank MMA: FDIC. Brokerage MMF: Rule 2a-7, not FDIC. Government/Treasury MMFs are conservative. Emergency fund: FDIC HYSA or Treasury-only you can sell same-day.
A known date, and the yield still wins after the disclosed early-withdrawal penalty. Do not CD the emergency fund.
No. Tuesday money. Bank CD = penalty. Brokered CD = secondary-market price. HYSA for the sleeve.
$250,000 per depositor per institution per ownership category. Joint is per owner. Trusts have their own cap since April 1, 2024. Confirm on EDIE.
Usually yes (1099-INT box 1). Treasury interest is box 3, state-exempt under 31 U.S.C. § 3124. Type your rates.
Bank: break for a penalty. Brokered: sell on the secondary. Both can be FDIC. Neither is the emergency fund.
Known date, hold to maturity, state tax high enough that the exemption wins. Do not T-bill rent due Friday. I-bonds are the 1–5 year fork.
Usually no. Automatic transfers beat a perfect APY you babysit. Promo 90-day APYs are a CD in disguise.
Educational only. Confirm FDIC.gov / NCUA.gov, 12 CFR 1030, 31 U.S.C. § 3124, 31 CFR 363.52, and your bank’s Truth in Savings disclosure before you move cash. Written by Thomas Sanders.