We keep two years' expenses (net after all other income) in cash-- the first year of cash is in a money market account and the second year of cash is in three-year CDs. "Three-year" CDs because if we need to break into them, the early-redemption penalty is only six months instead of one year.
My pension income is reliable enough that I don't feel the need to keep much of our portfolio in cash. (Two years is good enough to get through most bear markets.) Since we don't keep a lot in cash, we don't have to chase yield.
Chasing yield - Military Guide
That's the real danger with trying to maximize the interest on cash: the higher interest is always accompanied by higher risk. However the purpose of cash is liquidity and buying stuff at a discount, so it's acceptable to lose a little each year to inflation when you can negotiate a 10%-20% discount for cash.