Have you made a New Year's resolution to eat better and exercise more? Be careful your wallet doesn't get eaten alive by gym salespeople.

The health club industry basically has 2 business models. In the good one, you pay month-to-month or quarterly with no real contract. In the sleazy business model, you sign a long-term contract designed to give your checking account a workout.

With the sleazoids, the downfall begins when they offer you a free tour of their facilities. The tour is done by a commissioned salesperson with the intention of getting you to sign a multi-year contract.

Once you sign that contract, the sleazy gyms do what's called "moving paper." That means they sell off the contracts to a finance company that will take the note on for pennies on the dollar. So that creates additional incentive for the club to sign up more members—and hope none of them ever show up and all try to workout at once!

As you start checking out gyms, keep the following points in mind:

Check out hospital-affiliated fitness centers. They're usually rehab-based or geared toward the hospital staff. They're clean, well run, and don't force contracts. Most hospital gyms will sell memberships to the public. Visit the hospital nearest you to see if a gym is available.

Look for cheap 24-hour gyms. You may see these popping up in vacant storefronts around town. They're low cost no-frills gyms that tend to price out at around $15 each month with no contract. But beware they may not even have showers for you to use; they simply offer the use of exercise equipment at rock-bottom prices.

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Image of Clark Howard About the author: Clark Howard

Clark Howard is a consumer expert whose goal is to help you keep more of the money you make. His national radio show and website show you ways to save more, spend less and avoid getting ripped off. View More Articles

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