Is Going Long on CD Rates a Mistake Now?

Am I missing something about long term CD rates of 3.5% or so?  Assuming a typical 6 months early termination penalty, wouldn't breaking it after (for example) 2 years, still give a higher total return than investing in a 24 month CD?  According to my rough math, a $10000 CD would earn 18 months interest at 3.5%, or, approximately $525.  A 24 month certificate held to maturity at 2% would earn about $400.  Keeping it longer than 24 months only improves the advantage, and, in addition, if rates stay low for the full term, you'd be earning a highly competitive rate for 5 years.

Based on your breakdown of net interest earned even after an early withdrawal penalty, we should all put our money into a very long term CD and then cash it out before maturity whenever we feel that a better deal can be had elsewhere later.  This makes sense and provides some flexibility.  When rates rise, you can close it out and sell like a corporate bond. If rates stay down, then you hold until maturity (also like a corporate bond).  There would be some factors that negate taking this type of course of action with your funds - if you needed the money on very short notice often, you would incur penalties or the bank might refuse to close out your account.