I was doing my keyword picking this afternoon and really disappoint at the accurate of keyword tool... One keyword I found was listed for $0.05 and when I go ahead and set it up, it ask for $0.15 to active...
In general, the keyword tool is great for general estimates. I've had times where I was going see what it would cost to bid on a certain keyword. The Adwords keyword tool said $13.00-$17.00. I said, O, REALLY?! and went ahead and created a campaign anyways, and ended up only paying about 80 cents. Sometimes it's off, sometimes it's on. However, it is very poor at predicting the popularity status of very low volume keywords. Many affiliates look at the "not enough data to display an estimate" section and say "oh, no one's looking for it" when often times that's where the real gold lies. -T
The minimum bid is dependent on the quality of your ad and your landing page. Try using the keyword in your ad and see if that lowers required minimum bid. You could also try using the keyword in the URL, that will usually bump Quality score a little bit. Also the minimum bid does not necessarily mean that is how much you will pay for each click. It is merely a minimum bid level based upon a lot of algorithmic factors.
It's interesting though that my existing keywords are not working either... it keep saying keyword doesn't trigger any AD... I have those keywords on my title and description so little lost here... won't sure if it's google's end or mine. (It has been a day now) Also... I was testing my keyword... when my MAX is $1... it cost $0.7 to be 1-3, when my MAX is $0.2, it cost $0.15 so I am really confused...