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A HYSA vs money market fund comparison gets misleading fast if you start with the displayed yields. First ask when the cash is needed, where it sits, and what protection you require. Then screen a high-yield savings account (HYSA), money market fund (MMF), and any Treasury bill against those constraints and the T-bill maturity. Next, identify what each quoted percentage actually measures. Put only eligible choices on the same starting principal and holding period, then compare after-tax dollars. If the cash is already parked, move it only when the best eligible alternative adds enough to justify the transfer or maturity friction.
Why the quoted yields are not directly comparable
A HYSA’s annual percentage yield (APY) is a 365-day deposit measure that includes compounding. It helps compare deposit offers, but a variable bank rate is not a forecast. If you use today’s APY, treat it as a scenario input for the chosen horizon. Keep its tier, balance, promotion, and eligibility terms attached to it.
Money market funds can report more than one 7-day yield measure. SEC Form N-MFP reports a series-level 7-day gross yield before shareholder fees and fund operating expenses. It also reports a class-level 7-day net yield using the Form N-1A method. Before using a displayed MMF yield, first identify whether it is gross or net and which share class it covers. Then check how expenses or waivers are reflected. A gross or unidentified figure should not be treated as investor net yield.
Treasury bills use a third quote language. Treasury rules separate discount-rate and investment-rate conventions, which use different formulas and day-count bases. A bare T-bill percentage is not the same as APY. Before a bill enters the comparison, identify its quote convention and days to maturity, or use its actual purchase price and maturity value.
Displayed percentages are not a ranking. Keep each quote type clear, then put every eligible option on the same starting balance and holding-period endpoint. Only after that conversion does the dollar comparison mean what it appears to mean.
HYSA vs Money Market Fund: Start With the Cash Job
Before comparing yields, decide what the cash has to do. If the need date is immediate or uncertain, a fixed-maturity option may not belong in the ranking at all. If the date is known, use that same horizon for every choice.
Where the cash already lives matters too. Moving money out of a bank account is a different operational decision from reallocating idle cash inside a brokerage account. That friction is not part of the quoted yield, so keep it separate from the return comparison.
Then apply the protection filter. A money market mutual fund is an investment and is not guaranteed by the Federal Deposit Insurance Corporation (FDIC). Bank-deposit insurance follows the rules for deposits at an insured depository institution and their ownership capacity. Here, that difference is a screening constraint. Detailed failure-event coverage belongs in the separate SIPC-vs-FDIC analysis.
An option that fails a hard deadline, location, or protection constraint is out, even if its quoted yield looks better. The comparison below is only for choices that still fit the cash job.
The Quote-to-Net-Cash Switch Matrix
The matrix turns three different quote conventions into comparable dollars. Let B be the starting cash balance and h the comparison horizon in days. Every vehicle must use the same B and endpoint. If an input cannot support that endpoint, mark the vehicle ineligible instead of inventing a return.
| Vehicle | Eligibility / disqualification | Quote identity required | Normalized holding-period return | Pre-tax dollars | Authorized tax adjustment | Net dollars |
|---|---|---|---|---|---|---|
| HYSA | Keep only if the bank-side access, product eligibility, location, and protection constraints fit the cash job. | APY a, comparison as-of date, and relevant product, tier, balance, or promotion conditions. | R = (1 + a)h/365 − 1. This is an APY-equivalent scenario, not a promise that a variable rate persists. | Dpre = B × R | Apply only reader-supplied taxable-account assumptions that are appropriate to the actual account. | Pre-tax dollars minus only the modeled taxes supported by those assumptions. |
| Money market mutual fund | Keep only if an investment, rather than an FDIC-guaranteed deposit, fits the protection constraint and the brokerage-side location works for the cash job. | The exact displayed 7-day yield type and share class. A gross or unidentified yield is invalid for net-cash ranking unless its expense treatment is separately resolved. | For an identified simple 7-day yield q whose expense treatment is resolved: R = q × h/365 under an explicitly constant simple-yield scenario. | Dpre = B × R | Give no state-tax credit unless the exact fund, tax year, qualifying U.S.-government-obligation percentage, and applicable state rule are supplied. | Pre-tax dollars minus modeled taxes, with any MMF state-tax benefit limited to the supported fund-year-state inputs. |
| Direct Treasury bill | Keep only when the cash horizon is compatible with the modeled maturity endpoint and the required quote or price data are known. | Discount rate d plus days r; identified investment rate i plus Treasury day basis y; or actual purchase price P and maturity value M. | Discount quote: P = 100 × (1 − d × r/360), then R = 100/P − 1. Price data: R = M/P − 1. For investment rate with r ≤ y/2, R = i × r/y; for longer periods use Treasury’s semiannual investment-rate equation. | Dpre = B × R | In a taxable-account model, Treasury interest is federally taxable and exempt from state and local income tax. Reader-specific federal rates remain assumptions. | Pre-tax dollars minus modeled federal tax; do not add state or local income tax to direct Treasury interest in the taxable-account case. |
Δswitch = Dnet(best eligible alternative) − Dnet(current holding)
If the cash is already parked, set F as the minimum dollar advantage you require before accepting transfer hassle, maturity commitment, or other friction. Switch only when the alternative remains eligible and Δswitch > F. If you are starting fresh, choose among eligible options on net dollars without pretending that F is a switching hurdle. If the current holding fails a hard deadline or protection constraint, resolve that constraint first; F should not keep an ineligible option in place.
Start by filtering for eligibility, then identify the quote type and put each surviving choice on the same B and h. Use the formula that matches that quote and apply the sourced tax rules plus any tax rates you supply as assumptions. If the cash is already parked, compare the best eligible alternative with the current holding and calculate Δswitch. If you are starting fresh, identify the highest modeled net-dollar result among the eligible choices.
Worked decision trace: suppose cash is currently in a HYSA and has a fixed need date. A candidate T-bill matures after that date, so it drops out before yield ranking. Compare the current HYSA with the remaining eligible MMF on the same B and h, using the identified APY and MMF yield type. Apply only the allowed tax adjustments, then calculate the MMF’s Δswitch over the current HYSA. If that edge stays at or below F, stay put. If it clears F and the MMF still meets the protection, access, and account-location constraints, the switch passes the matrix.
Run the numbers with your own cash inputs
Once the eligibility screen is done, the calculator can handle the arithmetic. Use only products that still fit the cash deadline, account location, and protection needs; clear a quote field to exclude a vehicle. A T-bill is modeled only when its entered days to maturity match the comparison horizon. The tool does not substitute a made-up early-sale return.
Quote-to-Net-Cash Calculator
Normalize HYSA, MMF, and matching-maturity T-bill inputs into modeled after-tax dollars. The defaults are a dated market calibration, not recommendations.
| Vehicle | Pre-tax earnings | Modeled tax | After-tax earnings |
|---|
Dated calibration, not a recommendation: the defaults use dated August 2026 market inputs so the formulas open with realistic values. Replace them with current quotes before using the result. The 24% federal rate, 5% state rate, and $50 switching hurdle are illustrative assumptions. Full calibration sources are grouped at the end.
How much edge actually clears a $50 switch hurdle?
F becomes actionable when it is translated into a return hurdle. After every product has been normalized and taxed, let e be an annualized simple-equivalent after-tax edge. Over h days, the incremental dollars are about B × e × h/365. Solving for the edge required to recover F gives the break-even test below.
Required after-tax edge (bps) = (F / B) × (365 / h) × 10,000
This is not an APY, a 7-day yield, or a Treasury quote. It is a normalized after-tax sensitivity measure used only after the quote and tax conversions above.
| Starting cash B | 30 days | 90 days | 180 days | 365 days |
|---|---|---|---|---|
| $10,000 | 608.3 bps | 202.8 bps | 101.4 bps | 50.0 bps |
| $25,000 | 243.3 bps | 81.1 bps | 40.6 bps | 20.0 bps |
| $50,000 | 121.7 bps | 40.6 bps | 20.3 bps | 10.0 bps |
| $100,000 | 60.8 bps | 20.3 bps | 10.1 bps | 5.0 bps |
For example, with $25,000 parked for 90 days, a $50 hurdle requires about 81.1 bps of normalized after-tax edge. A 50-bp edge would add only about $30.82; 75 bps adds about $46.23; 100 bps adds about $61.64. With a $25 hurdle, every number in the table is cut in half; with a $100 hurdle, every number doubles.
The sensitivity range uses dated market examples rather than arbitrary numbers. Around publication, issuer pages showed HYSA APYs from 3.00% to 3.40%. The selected taxable, government, and Treasury MMF examples showed 7-day yields from 3.37% to 3.67%. In the SEC’s June 2026 dataset, the asset-weighted 7-day net yield for government MMFs was 3.49%. The median was 3.40%, and the 95th percentile was 3.60%. For the grid, 25 to 75 bps is a practical sensitivity band and 100 bps a stress case, not a forecast. The raw HYSA and MMF percentages still use different quote conventions, so normalize them before comparing.
Taxes can change the ranking, but not symmetrically
The tax advantage is not the same for every option. In a taxable account, direct Treasury-bill interest is federally taxable but exempt from state and local income tax. Your federal rate remains your own model input. Do not carry this taxable-account rule into a tax-advantaged account without checking the account rules.
An MMF gets no automatic matching state-tax break. A state-tax benefit needs the exact fund and tax year, the qualifying U.S. government-obligation share, and the rule for your state. Without those inputs, leave the MMF state-tax benefit at zero. The adjustment can change the net-dollar ranking, but only among choices that already passed the deadline, location, and protection filters.
Where T-bills fit and where they do not
A direct T-bill is only a conditional third choice here. The cash need date must be known, the bill’s quote type must be usable, and maturity must fit the modeled horizon. When those conditions hold, the bill can compete on after-tax net dollars. When they do not, do not force it into the ranking just because its displayed yield looks attractive.
Early sale is the main boundary to remember. A Treasury bill can be sold before maturity through a bank, broker, or dealer, but the maturity result is no longer locked in. If the bill is held in TreasuryDirect, it must be transferred to the commercial book-entry system before an early sale. Account location can therefore add another step. The sale amount can also change with market prices. A hold-to-maturity calculation therefore cannot be prorated backward and shown as the expected cash from an earlier sale.
T-bill boundary: if your cash horizon and the bill’s maturity do not line up, do not invent the missing return. Use a supported early-sale or post-maturity assumption, or leave that bill out of the ranking.
Keep the role narrow. This is not a Treasury-ladder guide. It asks whether one bill with a matching maturity belongs beside the HYSA and MMF for the same cash job.
Choose the parking place and set the next recheck
The final choice is not simply the highest displayed quote. It still has to pass the cash-job constraints and, when you are considering a move, your friction threshold.
- Choose the HYSA path when bank-side access or the bank-deposit protection classification is decisive. Also choose it when the eligible net-dollar gain from moving elsewhere is too small to clear F.
- Choose the MMF path when an investment rather than an FDIC-guaranteed deposit fits the cash job and brokerage location is useful. The displayed MMF yield type must be valid, and its eligible net-dollar edge must clear F.
- Use a direct T-bill conditionally when the need date is known, the maturity endpoint fits, and the quote or price data are valid. Its after-tax net-dollar edge must clear F without using a hold-to-maturity return for an early-sale case.
A higher displayed percentage can still lose. The option may be ineligible, or the quote may not be on the same basis as the others. Taxes may change the net result, and the dollar edge may still be too small to justify moving the cash. That is why the decision order matters more than the headline yield.
Re-run the comparison when the cash deadline changes or the money moves between bank and brokerage accounts. Recheck when a HYSA APY, MMF yield, T-bill quote, auction input, or your tax assumptions change. Also rerun it when new annual MMF government-obligation data appear. Do the same when a product changes its fees, access, liquidity, redemption terms, or protection features.
When rates or product terms change, update the matrix inputs rather than relying on today’s ranking. Keep the order the same: eligibility, quote type, one holding-period basis, supported tax inputs, net-dollar edge, then F.
YOUR TURN
What would change your result most today: the cash deadline, the yield, your tax rate, or your switching hurdle?
- Quote definitions: Regulation DD for deposit APY; SEC Form N-MFP for MMF 7-day gross and net yield definitions; 31 CFR Part 356 Appendix B for Treasury-bill quote conventions.
- Protection and tax treatment: Investor.gov MMF guidance; FDIC coverage rules; IRS Topic 403; and fund tax information used to limit any MMF state-tax assumption to a supported fund-year figure.
- Treasury mechanics: TreasuryDirect T-bills; TreasuryDirect selling rules; and Investor.gov bond-sale guidance for the maturity/early-sale boundary.
- Market calibration: SEC June 2026 MMF statistics plus dated issuer pages from Ally, Marcus, Fidelity FDLXX, Schwab SWVXX, and Vanguard VUSXX. These values calibrate examples; they are not a live ranking.
- T-bill calibration: Treasury FiscalData for the dated 26-week auction price used in the calculator default.
- TheFinSense method: each eligible choice is normalized to the same starting balance and cash horizon, then adjusted only with supported tax assumptions. For already-parked cash, the switch test compares the best eligible alternative with the current holding and applies the reader-defined hurdle F. The sensitivity grid solves F = B × e × h/365 for the annualized simple-equivalent after-tax edge e.
Update history
- v1.0 2026-08-11 PUBLISH
Original publication with the Quote-to-Net-Cash Matrix, interactive cash-parking calculator, and switch-hurdle sensitivity analysis.
Educational quantitative analysis based on published data. Not investment, tax, or legal advice. Consult a licensed professional before acting on any calculation. About TheFinSense.