The high-yield savings vs money market fund vs Treasury bill comparison in August 2026 comes down to a spread of more than three percentage points between the average bank deposit and government paper. The FDIC's national average savings rate was 0.38% and the average bank money market account paid 0.65% as of July 20, 2026 [1]. Money market mutual funds yielded 3.47% on average in early July [2], and the 3-month Treasury bill closed at 3.83% on August 7, 2026 [3]. The Federal Reserve held its policy range at 3.50% to 3.75% on July 29, so those yields are anchored for now [4]. This article compares the three options on yield, safety, taxes and access.
High-yield savings vs money market funds vs T-bills: where yields stand
The table lines up the most recent figures from each primary source. Bank averages come from the FDIC, which weights every insured bank and credit union by deposits, so the figures include the many accounts that pay almost nothing [1]. The money fund figure is the Crane 100 index of the largest funds [2]. Treasury yields are from the daily par yield curve [3].
| Option | Yield | As of | Source |
|---|---|---|---|
| Bank savings account (national average) | 0.38% | July 20, 2026 | FDIC [1] |
| Bank money market account (national average) | 0.65% | July 20, 2026 | FDIC [1] |
| 12-month CD (national average) | 1.68% | July 20, 2026 | FDIC [1] |
| Money market mutual fund (Crane 100 average) | 3.47% | July 2, 2026 | Crane Data [2] |
| 1-month Treasury bill | 3.79% | August 7, 2026 | Treasury [3] |
| 3-month Treasury bill | 3.83% | August 7, 2026 | Treasury [3] |
| 6-month Treasury bill | 3.96% | August 7, 2026 | Treasury [3] |
The FDIC also publishes a national rate cap, which is the higher of the national average plus 75 basis points or 120% of the comparable Treasury yield plus 75 basis points; for savings and money market accounts it stood at 4.38% [1]. Online banks that advertise "high-yield" accounts typically price near that Treasury-linked level rather than near the 0.38% average, which is why the label exists. The gap between 0.38% and roughly 3.5% to 4% is the cost of leaving cash in a default account.
What each option is, and what protects it
High-yield savings accounts
A savings account is a bank deposit insured by the FDIC up to $250,000 per depositor, per bank, per ownership category. The rate is set by the bank and can change on any day. Its advantages are same-day access and insurance. The drawback is that the yield is a marketing decision: the same institution can pay 0.38% on one product and far more on another, and the rate usually falls quickly when the Fed cuts.
Money market mutual funds
A money market fund holds short-term government or high-grade corporate paper and passes through the yield after expenses. Government and Treasury funds in the Crane 100 yielded 3.44% to 3.46% and prime funds 3.59% in early July [2]. Money funds are not FDIC insured; they are regulated by the SEC and aim to hold a stable $1.00 share price. Their yield follows the Fed's policy rate with a lag of a few weeks, so a fund's yield in August reflects the 3.50% to 3.75% range set in July [4]. Retail money fund balances reached $3.05 trillion in July 2026, according to DataPorium's economic metrics [5], evidence that households have already moved a large share of cash toward these yields.
Treasury bills
A T-bill is a direct obligation of the U.S. government sold at a discount and repaid at face value in 4 to 52 weeks. It can be bought at auction through TreasuryDirect or a brokerage with no fee, or sold in the secondary market before maturity. Its interest is exempt from state and local income tax, which the other two options are not (except for the Treasury-only money funds that qualify). It has no insurance because it needs none: the credit is the same one that backs the FDIC.
The tax and liquidity details that change the ranking
- State tax. For a saver in the 22% federal bracket and a 5% state bracket, a 3.83% T-bill keeps about 2.99% after federal tax and nothing is owed to the state. A 3.47% money fund holding mostly non-Treasury paper keeps about 2.53% after both taxes. In high-tax states the bill wins by more than its headline yield suggests.
- Access. Savings accounts and money funds are available the same or next day. A bill locks money until maturity unless sold, and a 4-week bill at 3.79% is close enough to the 3-month rate that short maturities cost almost nothing in yield [3].
- Rate direction. The FOMC statement on July 29, 2026 noted that inflation remains elevated relative to the 2% goal, partly because of energy-related supply shocks, and kept the range unchanged [4]. Locking a 6-month bill at 3.96% protects against a cut; leaving cash in a money fund keeps the upside if rates rise.
- Minimums. T-bills sell in $100 increments; most money funds require $1 to $3,000; savings accounts have no minimum.
On $10,000 for one year, the choices produce roughly $38 in the average savings account, $65 in the average bank money market account, $347 in a money fund and $383 in a rolled 3-month bill, before tax. The difference between the bank average and the Treasury is about $345 a year per $10,000, or $3,450 on a $100,000 cash reserve.
A market-oriented reading
The spread between 0.38% and 3.83% exists because deposits are sticky and many savers do not move. That is not a market failure; it is a price signal. Banks pay less because customers accept less, and the remedy is personal: compare the rate on the statement with the 3-month bill yield and act on the gap. With inflation running above 3% by the CPI series on DataPorium [5], cash that earns 0.38% loses purchasing power every year, while cash at 3.8% roughly keeps pace. For money that must stay liquid, investors may consider a money fund or bill ladder as the default and a bank account only for the amount needed for daily payments. Longer-term money belongs in a diversified portfolio, not in any of these three.
In August 2026 the average savings account pays 0.38% while a 3-month Treasury bill pays 3.83%, a gap that costs an inattentive saver about $345 a year on every $10,000.
Key takeaways
- As of July 20, 2026 the FDIC national average savings rate was 0.38% and the money market account average 0.65% [1].
- Money market mutual funds averaged 3.47% (Crane 100) in early July and Treasury bills yielded 3.79% to 3.96% across 1 to 6 months on August 7 [2][3].
- The Fed held its range at 3.50% to 3.75% on July 29, 2026 and described inflation as still elevated [4].
- T-bill interest is exempt from state and local tax, which widens its lead in high-tax states.
- Retail money fund balances of $3.05 trillion show that many households have already moved cash toward market yields [5].
Frequently asked questions
Which pays more in 2026, a money market fund or a high-yield savings account?
Large money market funds yielded about 3.47% in early July 2026, far above the 0.38% FDIC national average for savings accounts. Individual online savings accounts can price close to money funds, so the comparison depends on the specific bank [1][2].
Are Treasury bills better than a savings account?
On yield and tax, usually yes: the 3-month bill paid 3.83% on August 7, 2026 and its interest is exempt from state tax. A savings account offers instant access and FDIC insurance, which matters for money needed within days [1][3].
Are money market funds FDIC insured?
No. Money market mutual funds are SEC-regulated investment products that aim to keep a $1.00 share price; bank deposits are insured by the FDIC up to $250,000 per depositor, per bank, per ownership category.
What is the 3-month Treasury bill rate right now?
The 3-month bill closed at 3.83% on August 7, 2026, with the 1-month at 3.79% and the 6-month at 3.96%, according to the U.S. Treasury's daily par yield curve [3].
Sources & References
- [1] FDIC: National Rates and Rate Caps, July 2026
- [2] Crane Data: Crane 100 Index Inches Up to 3.47% (July 7, 2026)
- [3] U.S. Treasury: Daily Treasury Par Yield Curve Rates, August 2026
- [4] Federal Reserve: FOMC statement, July 29, 2026
- [5] DataPorium Economic Metrics (retail money funds, CPI, federal funds rate)
