Dear Harry: I know that interest rates are very low, but I'm trying to get the best possible rate on bank CDs. A friend told me about a rate he got on a two-year CD that flipped me out. He says he got a rate of 7.5 percent. I contacted the stockbroker involved, and they gave me the same deal. My wife, who is very safety conscious, told me to write to you before I got involved. The rates on longer-term CDs were even better. You have to get the CDs through this stockbroker in California. What's up here?

What Harry says: Two big red flags: You must deal with a broker . . . in California, no less; and there is no mention of insurance. Not all CDs are insured by the FDIC. It's not hard to find out if the ones you're interested in are insured. The bank will display the FDIC logo on its stationery and advertising. That's not the most certain way, however. I prefer to go to the Internet to fdic.gov or bankrate.com. We were able to contact the California broker and we found out that the CDs were as you described, but were issued by an overseas bank that had no U.S. branches and was not FDIC insured. Be careful. Some banks are issuing modified CDs that have some "come on" features that make the principal less secure. In addition, on any CD you will lose interest if you get out early, but on a brokered CD, you could lose principal as well. Stick to plain vanilla, and stick to the insured limit of $250,000 with any single bank.

Write Harry Gross c/o the Daily News, 400 N. Broad St., Philadelphia, PA 19130. Harry urges all his readers to give blood - contact the American Red Cross at 800-GIVE LIFE.