The key is that these funds only invest in short-term US Treasury bills, the safest bonds around, not corporate debt or mortgage debt like most money market funds. They pay a little less interest, but they more than make up for it with safety. You actually can lose money in a money market fund, and it has started to happen with some funds. There was a shot across the economy’s bow early last fall when a GE money market fund traded at 96 cents.
These are infinitely safer than banks. For spending money, you can just write checks from them to your checking account once a month or every 2 weeks or so.
American Century Capital Preservation Fund (800-345-2021),
Dreyfus 100% U.S. Treasury Fund (800-645-6561),
Fidelity Spartan U.S. Treasury Fund (800-544-8888),
USGI U.S. Treasury Securities Cash Fund (800-873-8637),
Vanguard Treasury MMF (800-662-7447), or
Weiss Treasury Only Money Fund (800-430-9617).
Do your own research, but to my knowledge the American Century and Dreyfus funds are not affiliated with any banks. This may be a good thing.