[maxerickson]

It's not entirely arbitrary. It has to cover the interest for the payment period and some portion of the principle balance.

Only paying the minimum will certainly result in paying a large amount of interest.

[maxxxxx]

The "some portion" part is certainly arbitrary. In any case, it's named in a way that people feel safe but they absolutely aren't.

[nly]

Well the idea is people don't pay off the principle fast enough not to end up maxing out their cards. Then they just apply for new ones. This is why people are in hock for life.

Then come the vultures. Consolidation loans, payday loans, etc.