Questions of Cash: Confusion over Smart move almost cost me extra £1,000

Q. I ordered a new smartphone from Three in June 2010. I made clear that I was cancelling my existing contract, as I was switching to a "pay as you go" arrangement. But Three continued to collect payments on the previous contract, despite the fact that I was no longer using that phone number. This was Three's mistake, so I must be entitled to the refund of the payments. This amounts to £27.41 per month, over 36 months, which is a total of £986.76. EH, by email.

A. There was clearly confusion during the phone call in which you cancelled the contract. You were not charged for your expensive handset – because it came as part of a contract renewal. If the call centre had realised you were cancelling the contract it would have charged you for the handset at a cost of more than £200. In what seems to us a very fair settlement, Three has offered to repay the amount you paid on the contract, less the cost of the phone. This comes out at £762.90. You are very happy with this proposal and have accepted it.

Q. More than two years ago, I purchased a mobile from Vodafone on a monthly contract. When this came to an end, Vodafone contacted me and asked if I wanted a new contract, with a new handset. I was very happy with my handset, so declined the offer of a new model. It was eight months later that I realised that I was paying the same contract price as before, even though the handset had been fully paid for during the previous contract. Vodafone failed to point this out to me. I have now gone on to a cheaper contract, but Vodafone has refused to refund the extra I paid unnecessarily. RG, Newcastle.

A. At the end of the two-year contract period you could have opted to go on a "SIM only" contract. A SIM-only contract can be as much as £30 a month cheaper than an inclusive package with handset. It is clearly not in the interests of a mobile phone company to point this out. A spokeswoman for Vodafone comments: "When a customer enters an agreement with us, this is for a minimum term. This minimum commitment gives us the flexibility to supply, not just the network service, but also high-value handsets at significant discount, or even for no charge at all.

After the minimum term – usually two years – customers can review their price plan, upgrade their phone, or move to a SIM-only arrangement and keep the existing phone. As [the reader] points out, we contacted him to let him know that he could upgrade his phone if he chose too. He chose not to, and the agreement with us carried on at the same price plan. Any changes to the agreement would be for [the reader] to arrange. We have 19m customers and it would simply be impossible for Vodafone to manage these accounts on behalf of customers, or to recommend certain actions and certain times during their agreement with us. This is not a service we offer, or claim to offer.

The agreement the customer signs up for is for a minimum term – it isn't a fixed contract. Plenty of our customers choose to continue with their agreement beyond the minimum term and continue to pay the line rental on their original terms." You are now benefiting from having gone on to a SIM-only contract. But it is always worth comparing the cost of a contract that includes a handset with that of a SIM-only contract, while buying separately the handset of your choice. This may be cheaper. The real cost of choosing an expensive smartphone will also become clearer. Some consumers may then decide that buying a cheaper model with fewer functions, used with a SIM-only contract, both meets their needs and is significantly less expensive.

Q. I had an old BMW car, which was stolen in December last year. In June this year I received from the RAC a notification of an insurance policy renewal. I explained that the car had been stolen and they had been made aware of this. I told its call centre that I did not wish to renew the insurance because the car is no longer in existence. The RAC then took an additional direct debit from my bank account of £99.50. I alerted my bank, which stopped the direct debit. On the 25th I received a letter from the RAC's debt recovery team stating that because the policy had been cancelled I owed them £532.68. I was to make a full payment of this by 4 August, or phone them to explain. I also received another letter requesting immediate payment. The RAC has been taking regular payments from my account, which have continued since my car was stolen last year. CM, Leicester.

A. The balance on your account with the RAC has now been written-off. A spokesman for the RAC says: "We have looked into the queries raised by [the reader] and are pleased to have now resolved them to his satisfaction. When an insured vehicle is stolen, it is the responsibility of the customer to let both their underwriter and insurance intermediary know about the theft as soon as possible and confirm their intentions for the policy.

"In these claims situations, we will generally allow customers to replace their stolen vehicle on their current insurance policy with a new vehicle, to ensure that they can continue to benefit from the remainder of their policy. However, when a policy is cancelled following a claim, customers are required to pay any outstanding premiums as explained in the terms of cancellation within the policy documents. We have now spoken to [the reader] and apologised for the additional stress this matter has caused. Due to him being a loyal customer of the RAC, we have waived his outstanding premium as a gesture of goodwill."

Questions of Cash cannot give individual advice. But if you have a financial dilemma, we'll do our best to help. Please email us at: questionsofcash@ independent.co.uk