Why Bank of America fee touches a nerve

This post comes from Richard Barrington at partner site MoneyRates.

Bank of America earned itself a barrage of customer complaints and negative publicity by announcing a $5-a-month fee on debit cards recently. Banks raise fees all the time, so why has Bank of America's decision touched such a nerve?

Here are four thoughts to help put this in perspective:

Bank of America is ignoring the Netflix example. Customers will get on board with new fees if the change seems incremental; when the change seems too radical, there can be a backlash. Netflix recently alienated a sizable portion of its customer base with an overly aggressive fee increase. That gaffe was well-publicized, but apparently Bank of America did not take notes.

There is a political element to Bank of America's actions. Bank of America is under a variety of financial pressures, but the proximate cause of the debit card fee is the Durbin Amendment to the Dodd-Frank Act, which limits the amount that large banks can charge retailers for processing debit card transactions. The high-profile way in which Bank of America (and some other banks) announced the new fee seems at least partially motivated by a desire to make a political statement about the cost of regulation. Post continues after video.

A political statement can spark a political backlash. Of course, by making such a high-profile statement, Bank of America opened itself up to public reaction, and the resulting negative publicity has almost certainly been more than Bank of America anticipated.

The marketplace will ultimately decide who is right. New fees can spark a sense of moral outrage, but in the end it's a financial decision. Is having a debit card worth paying $5 a month? Possibly -- but probably not as long as you can get the same thing for free somewhere else.

For now, Bank of America is in the minority in charging a monthly debit card fee, and that's a disadvantage because customers have plenty of alternatives offering free checking accounts and debit cards. As much as Bank of America will miss the revenue they used to get from higher transaction charges to retailers, they may find themselves missing even more the customers who now walk away.

More on MoneyRates and MSN Money:

• 9 banking tips your banker won't tell you
• Fed up with fees? 5 steps to switch your bank
• Cut your checking fees with a credit union
• New protest targets big banks
• Bank of America defends $5 debit card fee
• More banks testing debit card fees