This research explores how different types of purchases affect consumer perceptions of debt as good or bad. It also examines how these perceptions influence the likelihood of debt acquisition and subjective financial and overall well-being. Across seven studies, this research demonstrates that consumers perceive debt as good when it is acquired for utilitarian purchases, whereas they perceive debt as bad when it is incurred for hedonic purchases. Importantly, the perceived utility of debt for personal growth mediates this effect. Consistent with this underlying mechanism, this research further shows that the positive effect of utilitarian (vs. hedonic) consumption on debt perception is mitigated (1) when consumers place more importance on hedonic (vs. utilitarian) goals, and (2) when the virtue of savings is made salient. Furthermore, this research demonstrates that this effect also carries over to consumers’ debt acquisition decisions as well as perceptions of financial and overall well-being. Together, this research makes important theoretical contributions by identifying a previously unexplored factor that affects consumer perceptions of good versus bad debt, with significant downstream effects on debt acquisition decisions and perceived well-being. Managerially, this research provides insights that can help marketers develop strategies aligned with consumers’ psychological processes in debt-related decision-making. This research also informs consumer advocates and policymakers seeking to develop more appropriate attitudes toward debt and promote improved financial decisions and overall well-being.