In this case there is no reason to purchase the shorter term CD. I suspect the product choices exist because:
- Some people may not realize this and choose the lower rate products. The bank makes a little extra profit when this happens.
- Offering a choice enables astute people to be excited with choosing the highest rate and perhaps like the product slightly more due to their knowing they "beat the system", even if just ever so slightly.
While we're at it: let's point out that not only do you get to lock in the higher rate, if rates go up further I see nothing preventing you from closing out and re-opening at the higher rate, again for the longest term available.
Update: Here's the product Marcus by Goldman Sachs is currently offering:
I couldn't take it and I had to know, so I called them. (I already had them on speed dial from a personal loan I did with them.) The person I spoke to confirmed there is no real benefit to the shorter term product. I also asked about closing and re-buying if rates go up, and she agreed you can do that, but "that's not what CD products are designed for".
As a side note, I don't want this to be misconstrued as Marcus trying to take advantage of uninformed customers that may choose the lower rate. I have personally done a no-fee Marcus loan (as a credit score experiment while moving around CC debt between 0% promotions), and I found their customer support to be top notch, and it was one of the most pleasant loan experiences I ever had.