Money-Saving Iceland Travel Tips

If you’re looking for money-saving Iceland travel tips we have you covered. Iceland has so much to offer for a great adventure trip. Without careful planning, the cost of a trip to Iceland can be quite expensive. The best way to save money in Iceland is to plan ahead and we’ll share with you our best tips for saving on a trip to Iceland. If you’re looking for trip planning help check out our 5-Day Iceland itinerary and Iceland Stay ideas.

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What is the Currency in Iceland?

Let’s start with the basics, the currency in Iceland is the Icelandic króna. The international currency abbreviation is ISK, but in Iceland, you will see “kr.” before or after the cost. The Icelandic króna is the only currency used in Iceland. You still won’t see much cash used as the country is very dependent on debit and credit cards and many locals never use cash.

How you spend matters in Iceland

Because Iceland is a largely cash-less country that accepts credit or debit cards throughout the island there is no reason to exchange money unless you prefer to. Before you leave home, confirm the credit or debit card you plan to use in Iceland does not charge a foreign transaction fee. These extra fees can add up fast when using your card abroad. The fees are often 1% to 3% of the amount of a purchase, and many banks also apply the fee to ATM withdrawals. If your card does charge a foreign transaction fee, consider getting a new card that doesn’t charge one as there are so many great card options. 

Whenever provided the choice to select either Icelandic Krona, USD or your local currency always choose ISK for the best rate. If you select your own currency, your credit card or bank may apply a higher exchange rate. Also, Iceland uses cards with the chip-and-PIN system, which requires a 4-digit PIN for purchases. You can call your credit or debit card company to get or set up a pin before you go. This can especially be an issue when getting gas so make sure to have a card along with a 4-digit pin as you’ll need this to get gas. If you don’t have one look to buy pre-paid gas cards at local N1 gas stations or in supermarkets.

Pro tip

You will need a card with a pin in order to get gas in Iceland. If you don’t have this you will need to buy pre-paid gas cards. Although most debit cards use a pin most apply a foreign transaction fee. Best option is to get a pin from your credit card company if you don’t already have one. Sometimes in the US it’s called a “cash advance pin”.

Find Cheap Flights to Iceland

If you don’t see a flight deal to Iceland wait and there likely will be soon. On flights from the US and many other major cities, this is where you can find savings. Set Google Flight Alerts and sign-up for Going email flight alerts (paying for elite is worth it!) and be patient. Once you find that great flight deal don’t skimp on baggage. It doesn’t matter the season, you will need to pack layers. Also, if you’re looking for ways to save we recommend bringing some food items from home. This can save a lot of money when traveling to Iceland so plan your baggage accordingly.

If you’re looking for low-cost flights to Iceland check out the new Icelandic budget airline named Play. It’s launching with flights from Baltimore-Washington International Marshall Airport to Iceland’s Keflavik Airport but will likely add other locations soon. It also serves two dozen destinations in Europe from its Iceland hub.

Inexpensive Accommodations in Iceland

Campervan and RV Rentals in Iceland

Campervans, RVs, and tent camping can be some of the most economical accommodation options when visiting Iceland. If you’re looking to save on a trip to Iceland a campervan is the way to go if you can make the space work. It’s good to remember you need to camp or park your Campervan or RV overnight only in designated campgrounds. Campgrounds charge per person and often range from $10-15 for adults and less for kids. The camping card mentioned below can provide greater savings.

Bonus Campervan Tip – try calling hotels as you adventure along the Ring Road to see if they’ll let you park in their parking lots. This can often lead to less crowded experiences and these locations are often closer to the Ring Road for convenience. Save on the campground fees. Note, that you must get approval before staying.

For us traveling with three kids, we couldn’t make the campervan or RV space work for our family while working and exploring from the road. Check out our Guide on Where to Stay in Iceland if the campervan option isn’t for you. If you have 2 or 3 people or small children this is a great option. These companies and many more rent campervans in Iceland:

Kuku Campers
Happy Campers
Campeasy

Tent Camping in Iceland

Tent camping in Iceland can be a great budget option if your travel companions are fairly resilient and if you’re going in the summer months. The weather in Iceland is highly unpredictable year-round so you have to be up for rain and high winds. There is something called the Camping Card that you buy in advance and it gives you access to camping sites all over Iceland. The card includes a maximum of 28 nights for one family (2 adults and 4 children 16 years old or younger). Reserving campsites in advance in Iceland is usually not necessary but if you prefer to make a reservation you can here. You can also view the various camping sites and amenities here.

If you need to rent camping equipment in Iceland you can find it here.

Rent Camping Equipment in Iceland 

Hostels in Iceland

Hostels in Iceland are another low-cost accommodation option.

Hotels or Vacation Rentals in Iceland

Find our full guide on the best accommodations along the ring road as well as great places to consider if you want to see the northern lights.

Where to stay in Iceland on the Ring Road (includes Northern Lights viewing)

Booking accommodations in advance gives you the luxury of choice and price. This goes a long way, especially in areas of the ring road where accommodations can be quite limited. Booking.com is great for comparing hotels, apartments, and home rentals all in one place. If you have more than four people in your group you will need to select two rooms in your search parameters to return the right results. We love using Booking.com in Iceland because it provides an option to book refundable or non-refundable rate options which is helpful when planning a ring road trip that can require shuffling things around.

Booking vacation home rentals are a great way to save money when traveling to Iceland. Food prices are what can make or break a trip and having a kitchen to prepare meals can save a lot. When booking, confirm the kitchen will have the appliances that you’ll need, and often the fridge sizes can be much smaller so check this if you have a large family. I’m looking at you small beverage fridge often passed off as a standard kitchen fridge in listings.

Search for “family rooms” if you have kids so you don’t have to book two hotel rooms. Also, look for efficiency cabins that can be booked directly so fewer fees. The Volcano Hotel near Vik has family rooms. Lastly, check campground websites to see if inexpensive camper cabins might be available such as this one. This is another independent apartment option near Vik.

How to save on all things Car Rentals in Iceland

It’s not a myth, gas is very expensive in Iceland

Unless you’re planning to use a tour company driving is a necessary part to truly see everything that Iceland has to offer. It’s best to know in advance what to expect as gas prices are substantially higher than in most other places in the world. You can check what current gas prices are in Iceland when planning a trip. The nice part is the majority of gas stations throughout Iceland are the same price so you don’t have to worry about searching for the cheapest one. There’s one exception to this. There is one Costco store in Reykjavik and the gas station there is the least expensive gas in Iceland. You do need to be a Costco member and a membership card is valid at any Costco warehouse worldwide so if you’re a member it will work in Iceland. Also, some gas stations have free self-service car wash stations. This is a great option after driving on F-roads.

Pro tip: When getting gas select the option right below “fill tank” to avoid a ~$200 hold that gets placed on your card. Also, always fill up when you’re at half a tank as there are some area where gas stations are difficult to find.

Budget Car Rental Iceland

With the rise in tourism in Iceland, the supply for rental cars has not kept up with demand. This means the cost to rent a car in Iceland is substantially higher than in the US or Europe and this is also due to mandatory insurance requirements as well as taxes. We recommend checking availability before you book your flight. First, check Northbound which aggregates all the car rental options in Iceland in one place, and then we recommend booking direct when you find the best option. Reserve a car as early as possible, make sure you understand the cancelation policy, and then keep checking back for a lower price.

Never pre-pay for a car rental. Reserve it and then check prices again a month, a week and a few days before your trip. Often you can save money and if you don’t you can always re-book it as pre-pay for the savings right before your trip.

If renting a car in Iceland will not work for your budget consider one of the many tour bus options. 

Don’t speed in Iceland

An open highway can be tempting but speeding can be costly if you get caught in Iceland. The speed limits are posted and vary based on the type of road you’re driving on. The speed cameras in Iceland are often mounted and there are warning signs. If you are caught on camera the ticket will come through the mail and this can be months later. The car rental companies in Iceland are required by law to share your information if you are caught speeding while driving one of their vehicles. Tickets are expensive and can range from $195-460 depending on speed.

How to Save on Iceland Food Prices

Food can make or break a budget when visiting Iceland. On an island most things need to be imported and this includes food. Overall the cost of food in Iceland is about 1.5-2 times that of the food cost in the US. So if you’re traveling with kids or a larger family you’ll want to plan ahead. There are many tips I’ll share for how you can save on the cost of food in Iceland.

Tips for Buying Groceries in Iceland

The grocery stores with the best prices in Iceland are Bónus (similar to Aldi in the US), Krónan (the closest competitor to Bónus, larger selection, and more produce), Nettó (mainly in Akureyri and also has household goods in addition to groceries). These are the best grocery stores in Iceland to save money.

Víðir is probably the best quality grocer in Iceland with the largest selection but it is expensive. The store 10-11 is the most expensive, almost double the prices you’ll find at Bónus so steer clear. Also, look out for very high prices for pre-packaged, on-the-go foods in gas stations.

To fully maximize the savings on food you’ll need to have accommodations with a way to prepare meals as well as a cooler for on the go. We love this fold flat cooler and it easily packs in the bottom of a suitcase. We found restaurants to be at least double what we’d spend in the US with very high taxes and fees, so when traveling with a large family it was worth it to cook the majority of our meals.

Bringing food from home to Iceland can save

We don’t often do this when traveling as it’s just as easy to buy after arriving. But in Iceland, it’s worth it to pack some shelf-stable snacks, foods, and storage items like reusable bags, and a foldable cooler. If you pay to reserve your plane seat this often comes with a checked bag anyway so why not save by bringing some essentials from home. Make sure to check the list of restricted items and know that travelers can only import duty-free up to 22lb/10kg of food, including candy, not exceeding the value of ISK 25,000/~$190.

Some items that we bring with us from home: are oatmeal packets, tortillas, microwave popcorn, dry soup packets, granola bars, taco seasoning, coffee/filters, ramen, peanut butter, jelly, and macaroni and cheese. It helps to have quick snacks at the ready for the kids when arriving and saves some on the grocery bill. Reusable grocery and food storage bags are also important as single-use plastic is limited in Iceland and they charge for bags.

Tip: Outside of Reykjavik most food establishments and grocery stores close by 9-10pm (21:00-22:00) or earlier so plan ahead.

Drinking and Nightlife in Iceland

Alcohol is very expensive in Iceland so the best option is to buy any wine or adult beverages you might want from the duty-free store at the airport. This is the least expensive option you’ll find in Iceland. The liquor stores “Vínbúðin” are state-run, very expensive, and have limited hours. Also, if you’re looking for nightlife on a budget check out the app called Appy hour and it will give you the best happy hour deals.

Drinking water in Iceland

Don’t buy bottled water. Iceland is known for its water purity and bringing a reusable water bottle helps prevent using single-use plastic. The tap water in Reykjavík is among some of the purest water available anywhere in the world. Skip buying bottled water!

Things to do in Iceland on a budget

The majority of beautiful outdoor sights to see in Iceland are free other than some may have a small charge for parking.  So after you have your essentials covered you can easily self-tour and experience all that Iceland has to offer. Find a listing of the best hot springs in Iceland with many of them being free.

National Parks are free in Iceland

There are three National Parks in Iceland and they are free to visit other than some have a parking fee. 

Þingvellir National Park (international spelling is Thingvellir) has a parking fee but not park entrance.

Vatnajökull National Park as well as the nature reserve of Skaftafell.

Snæfellsjökull National Park, in Snæfellsnes, is a great visit.

Tips for Saving on Tours in Iceland

Tours can be a great alternative if you’re not renting a car. Most tours leave from Reykjavik or Akureyri so you’ll want to position yourself in one of those locations.

To get from the airport to Reykjavik without a car check into the Flybus.

Finding the best price on tours in Iceland
There are so many options for tours in Iceland so we’ll only touch on how to save when looking for a tour. Google the tour company name before booking. Often you can find the same tour listed on multiple third-party sites for different prices. Also, check the tour company’s social media pages as sometimes you can find a discount code listed. We saved $100 on an Ice Cave tour by using a code only offered on Instagram! 

Tip: Check out the free walking tours in Reykjavik here. They have no fixed cost and are based on the pay what you can model similar to walking tours found in many major cities.

Visiting a Hot Springs in Iceland

Check out our where to find the best hot Springs in Iceland which includes a map you can save, plus lots of free hot springs as well.

Iceland sits between two tectonic plates as well as above an area of high volcanic and geothermal activity giving it endless hot springs and geothermal pools. Although Blue Lagoon is the most popular, it can be expensive and there are alternate budget-friendly ways to experience Icelandic hot springs without the high price. We do recommend everyone experience Blue Lagoon at least once if possible, but these are some backup options. The Myvatn Nature Baths in northern Iceland is a cheaper alternative to Blue Lagoon and still has that similar milky blue water. Local towns throughout Iceland all have their own community swimming pools and hot tubs. These can often be in very scenic areas and can be free or lower cost than the larger spas. There is also a Geothermally heated beach in Nautholsvik that is free during the summer months and you pay a small fee for the changing area in the other months. It’s another fantastic budget activity near Reykjavik.

If you decide to check out Blue Lagoon, kids are free and we recommend going on your first or last day in Iceland. Many flights coming into Iceland arrive very early so often it’s a great thing to schedule on the first day. Reservations are required and remember to give yourself some extra time in case of a flight delay.

VAT refund in Iceland

VAT stands for Value Added Tax and those selling goods and services in Iceland declare and pay a VAT of 24% or 11% which must be added to the price they are charging. Tourists who reside outside of Iceland can claim a proportional VAT refund when shopping in Iceland. The refund is limited to purchases that are intended to be taken out of the country and amount to a minimum of ISK 6 000 (including VAT), made at a single point of sale. The store personnel will fill out the necessary tax refund form. Then you save any forms and present them at the end of your trip when departing from Keflavik Airport. There is a line for requesting VAT refunds at the airport and if you’re departing from other points there is usually a mail-in refund option. The purchased goods must also be available on departure if asked. You provide the tax refund forms and then the refund is provided in the currency of choice. 

Does seasonality matter?

In our experience, seasonality matters very little when trying to manage the cost of a trip to Iceland. Summer is the peak time to travel but winter also brings travelers looking to see the northern lights so when comparing there really wasn’t much of a change in cost.

Check out tips for Visiting Iceland in June.

What to pack for a trip to Iceland?

It doesn’t really matter the season when packing for Iceland you need to pack in layers. In the winter you need heavier down coats, boots, merino wool socks, and baselayers. waterproof mittens/gloves, hat, and neck gaiter. In all months you need base layers, waterproof and windproof rain jacket (not packable), rainproof pants, hat/gloves, and waterproof hiking shoes. Plan for more socks than usual and a backup pair of shoes for hiking as it frequently rains and backup hiking gear is helpful.

Related articles for packing

The Ultimate Iceland Packing List
The Best 5-Day Itinerary for Iceland
Our Favorite Eco-Friendly Travel Products
The Best Hiking Gear for Kids Guide
The best women’s hiking shirts
The Best Men’s Hiking Pants — Tried & Tested

“There’s no such thing as bad weather – only the wrong clothes.”

-Billy Connolly

Lastly, there’s no doubt Iceland is an expensive place to live or visit but there are ways to make the trip more economical. It does take some planning ahead to get the best deals on accommodations and car rentals in Iceland. Also, the cost of food in Iceland can be a significant portion of the budget so have a plan before you go. It is an amazing trip experience that you can’t get anywhere else in the world and is worth the extra expense. Let us know if you have any great tips for saving money in Iceland?