Hannah is exploring savings options from several different banks and has settled on one of the financial products offered by Bank A. Calculate the effective annual interest rate for Hannah given that...

Hannah is exploring savings options from several different banks and has settled on one of the financial products offered by Bank A. Calculate the effective annual interest rate for Hannah given that the nominal annual interest rate is 3% p.a. Note that the nominal interest rate is compounded monthly.

Additionally, Bank B is offering the same product with an effective interest rate of 5.5% p.a. Given this, would Hannah be better off saving with Bank A or Bank B? Justify your answer.