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The Hidden Cost of Gym Memberships

Another year, and you're another 10 pounds heavier. Or maybe the weight's staying steady, but you'd like to not be out of breath when you walk up a flight of stairs. Whatever your fitness goals, it's usually about this time of year that people start remembering, "Oh, that's right. I have fitness goals."

Naturally, a lot of people who want to get in better shape join a gym. In fact, according to IbisWorld, a market research company, an annual $30.3 billion was expected to be spent by Americans on gym, health and fitness clubs in 2016.

That should be applauded, of course. Everyone knows that exercising is one of the best things you can do for your health. But paying for a gym membership may be one of the worst things you can do for your bank account -- if you aren't paying attention or have some bad luck. Before signing up, you'll want to spend some time, in particular, thinking about ...

[See: 10 Financial New Year's Resolutions.]

Registration fees. There's nothing inherently insidious about this fee. A gym is a business, and businesses try to make money. But in the advertising, there's likely no mention of that startup fee you'll have to pay. It's also interesting that, at least according to one industry insider, gyms wouldn't likely go broke if they didn't require these fees.

"The illustrious initiation fee is put in place to make you trust there are startup costs for the organization to start your membership. The truth is the initial out-of-pocket costs are most likely three dollars," says Deidra Lassalle, director of membership for Under Armour Performance Centers Powered by FX Studios, a group of fitness facilities in Maryland.

Lassalle has worked for 13 years in the health club industry. She says there are three primary reasons for a startup fee: to give it to the salesperson as a commission; to reduce it to get consumers excited about joining at a discounted rate; or to use it to help boost the gym's monthly revenue.

Lassalle adds that she doesn't require an initiation fee at any of Under Armour's facilities.

[See: 25 Fast Financial Fixes.]

Annual fees. When you sign up at a gym, you may wind up with an initiation fee and an annual fee. The initiation fee you'll never pay again, but the annual fee is, well, annual, and so factor that in when you're budgeting for the gym. If the gym membership is $10 a month, but you're paying, say, an $80 annual fee, really you're paying closer to $16 a month every year (and if there's a registration fee, add that on, and the first year, you're paying even more per month).

If you're a long-time member of your gym, you may want to monitor whether the annual fee keeps climbing every year. Your low monthly membership may be a bit of a mirage.

Prepaying memberships. Don't automatically assume this is a good idea. Many gyms will offer you a discount, often 4 to 5 percent, if you pay for a year or two upfront. That may work out well. You get a discount. You're (perhaps) more likely to stick with your exercise regimen knowing you've paid all that money to join a gym. You could argue all day that this is a good idea, and you'd be right.

And wrong. Jessa Miyamoto, 34, a global study manager for a biology technology corporation, joined a gym back in 2009 and regrets prepaying. She signed a three-year contract with a gym in Edgewater, Maryland, and coughed up $1,295.

The problem? Miyamoto says the gym closed 11 months later. She was allowed to use another nearby branch, one she wasn't crazy about, and then a few months later, that location closed, too. Miyamoto calculated that she was owed $893 for the remaining time (about two years) that she wasn't able to use her gym. Six years later and after numerous attempts to get the money back (including contacting the gym, the Bureau of Consumer Protection and her state's attorney general's office), she still rues the day she prepaid for her gym membership.

Miyamoto ultimately joined another fitness center, and based on her experience, she says consumers should be cautious about prepaying -- and to recognize that some gyms may be attached to a national name but still be owned and operated as a separate franchise.

"So you aren't always necessarily protected by that big reputation," Miyamoto says.

The time factor. That may be the biggest issue of all for gym members. David Rachford, a yoga instructor based in Santa Barbara, California, who runs, says he dropped his gym last year because of the time investment.

[See: 11 Ways to Save Time and Money.]

"While I live only two-and-a-half miles from the gym, the commute time adds up to another 25 minutes round trip each morning. Adding a workout on top of the commute, and I was investing an hour and a half per day to go to the gym," he says.

He now exercises at home. In fact, industry experts have argued for years that gyms are counting on most of their members staying home, and one comprehensive study on gyms a few years ago wryly observed that if you're paying a monthly fee but aren't using your membership regularly, you're essentially paying to not go to the gym.

None of this, of course, is to suggest you shouldn't join a gym. You may not be getting any thinner. Your cardiovascular situation won't change unless you get moving. But if you're thinking about joining a gym as a New Year's resolution, consider whether you really will use it. And pay attention to a gym's hidden costs because if you don't -- you'll just pay.

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