Did you know that your credit card bill could make you a millionaire? As unbelievable as it may sound, a US physicist seems to have made the improbable happen. Getting rewards and cashback for your credit card bill payment is no big deal because most of the times the reward amount is insignificant. However, US physicist Konstantin Anikeev managed to earn over to Rs 2.17 crore using a ‘unique idea’,
According to the Washington Journal, Konstantin was interested in earning from credit card and had been doing it since 2009. What started off as a hobby soon became a ‘profession’ for him over the years and he managed to earn millions through it.
Konstantin used his credit card to buy a large number of gift cards that he would later encash and deposit in his account. Now, the money in the bank was used to pay the original bill for the gift card and this payment earned him a reward from the credit card company. These rewards from the bill payments were his earning and he would repeat the process multiple times to earn more money.
For instance, Konstantin would earn $25 as a reward for the purchase of a $500 gift card on the basis of 5 per cent. Now, to encash this gift card he would have to pay $6 as a fee. After the process, he was still left with a $19 reward, which would be his profit.
Over the years, Konstantin earned $300,000 (about Rs 2.17 crore) repeating this trick.
Meanwhile, seeing his income rise exponentially someone reported this to the US Tax Department. After which an investigation was carried out.
The case was referred to court where Konstantin arrived with a tub full of gift cards and defended himself by saying that the rewards were not his income but discounts and cashback given to him by the credit card companies.
Hearing arguments from both parties the judge ruled that that the credit card rewards were like property and rewards earned on purchases will not be taxed. However, if the gift card and rewards are converted back into cash, it becomes profit and shall be taxed.
The authorities are now working on an account to collect tax from Konstantin.