How expensive is Iceland? How much money will you need when travelling in Iceland? What is the condition of the Icelandic currency? Read on to discover our guide on spending and saving money in Iceland.
The nature of Iceland, which boasts of glaciers, waterfalls, active volcanoes, ancient mountains, geysers and black beaches, draws a myriad of international visitors every year, each searching for adventures and memories to last a lifetime.
This fair country, however, holds a reputation other than the allure of its natural wonders. The questions on everybody’s lips before they decide to book their flight, besides which tours to engage in and which hotels to reserve, is exactly how much money will they need in Iceland. Is it at all possible to travel on a tighter budget, or is it a destination reserved for the wealthy?
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According to Numbeo's Cost of Living Index, Iceland currently ranks as the third most expensive country in the world. Local banks have also studied the essential travel costs for tourists, and the numbers are staggering. Staying in hotels is 10-32% more expensive in Reykjavík than other Nordic capitals; prices of restaurants and lodging exceed the EU average by 44%; while the cost of alcoholic beverages outstrips the same standard by a whopping 123%.
Don’t get too disheartened, though; there are in fact multiple ways to travel in Iceland without emptying your bank account. For this guide, we have gathered information on the Icelandic currency, as well as numerous ways to sightsee, travel, commute, dine and shop on or off a budget, allowing you to plan your trip to the island of ice and fire with care for your wallet.
Click here to skip to estimations of daily spendings according to different criteria.
It might come as a surprise to some people that a nation of roughly 330,000 people has its very own currency. Iceland's currency is called Króna (ISK) and has gone through a long history of independent monetary policies, being pegged to the Danish krone, the British pound, the US Dollar and the Euro.
The history of the Króna is a complicated one, with the locals regularly arguing for or against keeping it. What you should bear in mind when travelling to Iceland is the indisputable fact that this currency has little to no value outside our shores. Its worth is altogether determined by the Central Bank of Iceland, and very few banks outside of Iceland ordinarily carry it or exchange it.
This is why, when travelling here, you should not carry large amounts of currency with you. You can exchange your notes at the airport, but the exchange rate is more favourable if you do so in a bank in Reykjavík City. You are also advised to remember to change your money back before leaving, so as to not get stuck with a currency that no bank abroad really wants.
It is most common for travellers and locals alike to pay for everything on their credit or debit cards. From small food shacks to large shopping centres: basically everywhere in Iceland accepts card payments, so it may be worth just packing light and paying with your plastic.
Due to fluctuating exchange rates between currencies, all prices in this article will be listed in their original ISK format. If you're not used to the Króna beware, the numbers might look shockingly high because of its lack of subdivisions.
What you will end up paying for accommodation in Iceland largely depends on the type of lodging you select. From cottages and hostels to guesthouses and apartments, the variety at hand has a vast price range, and there are surely options that will suit your particular needs.
Expensive as the overall selection might be, you won’t find any five stars hotels as of yet since the upscale market just isn’t large enough. For 3 or 4 star hotels, however, the prices range from anywhere between 5,000-100,000 ISK per night, with most establishments offering free WiFi and breakfast.
Expensive lodging is not only the case for visitors but for locals as well; the price of a roof over one's head is soaring. There is a housing problem on the rise in Reykjavík, where the top percent of the community monopolises the current generation of renters that are incapable of investing in homes.
A significant factor in this situation is the staggering number of apartments being leased through Airbnb in Reykjavík. If you're considering this route, it is implored that you think of the community you are coming to, and try not to extend this problem for the locals.
Consider booking official accommodations, and remember that renting out full apartments is also available, as well as booking people's summer cottages in the countryside which is much more appreciated. These summer houses offer closeness to nature, tranquility and exclusivity, and they often come with your own personal hot tub while still being very affordable.
Nobody wants to stay cooped up in a hotel for the duration of their stay, so even if you book the cheapest accommodation with this in mind, tour bookings, transportation and the issue of food still add onto your spending. However, by booking summer or winter packages that combine different establishments and include discounts for accommodation, transport and breakfast, you save yourself the jolt when it comes to taking care of the bill.
Your cheapest bet, however, will most usually be camping. Luckily, that is an option of steadily increasing availability when travelling around Iceland. Camping allows you to get closer to the nature that you are here to see and is by far the most sustainable option, providing that you leave the area in the state that you found it.
When camping in Iceland, you still need the means to travel to your selected locations. That is where car rentals and self-drive tours come in handy. You are provided with a vehicle, or a camper with a rooftop tent, as well as a detailed itinerary which makes you the guide, enabling you to navigate around the island and visit its sights on your own accord.
Remember, however, that Iceland is situated on the edge of the Arctic Circle, so camping is an infinitely easier option during the summer months. Camping in the Icelandic winter is an activity reserved for only the most avid trekkers, who are experts in reading the weather forecast and possess all the proper equipment, as well as having years of experience when it comes to surviving in the wild.
If you are feeling adventurous, there is also the option of hitchhiking, which is extremely safe in Iceland. If you are driving a rental, picking up hitchhikers and suggesting that they pitch in for petrol is an excellent way of saving gas money.
As for the case of inner city transport, do not take a taxi unless it's absolutely necessary, and only if you are going to be travelling short distances within the city. The flag rate starts at 600 ISK and from there the meter runs fast. Reykjavík is, in fact, a very roam-friendly capital, as well as boasting the public bus service Strætó, where the regular fare is at 440 ISK and limitless within the hour.
Photo by 'Helgi Halldórsson' - Wikimedia Creative Commons
The public transportation system outside of the capital, however, is quite lacking. If you are going to be travelling anywhere outside the city, you should know that renting a small car is always a lot less expensive than taking a public bus.
In the last few years, Iceland has witnessed a surge in its local food scene, with numerous world-class restaurants sprouting all over the capital. The possibilities for dining are endless; traditional Icelandic food is fused with other cuisines, or spiced up with exotic ingredients, to create venues for fine dining that stand tall amongst the competition.
Eating out is relatively expensive (the average plate will cost between 2,000 and 4,000 ISK), so the locals consider restaurant dining as a treat, as opposed to a regular occurrence. If you are going to be eating out in Iceland every night of your stay, expect your expenses to soar.
What you should do instead is research the possibilities, and plan for one or two special occasions. As it is with most things in Iceland, they might come at a cost, but they are well worth it for the unique and quality experience.
Be careful when you buy fast food like pizza, burgers or sandwiches. One might think it more cost-effective, but in reality, Reykjavík's lesser dining pretty much falls within the same price range as the finer dining. A pizza usually goes for around 3,000 ISK—virtually the same price as a meal at a nice restaurant.
The best way to save a buck while eating out in Reykjavík is to take advantage of lunch hours, when numerous inner-city restaurants offer reduced prices or two-for-one deals on selected dishes.
Obviously, the most economical way of eating food in Iceland is to cook it yourself. If you are going to be purchasing groceries, avoid the supermarket chain 10-11 which is by far the most expensive grocery store in Iceland. Shopping there might go as far as doubling your grocery bill.
You are rather advised to hit the low-price stores, such as Nettó, Krónan and Bónus, that each have abundant locations both in and outside the capital. These stores are also ideal for lunch-pack shopping before you leave town and embark on your adventures. Road-side kiosks tend only to offer things like burgers and hot dogs, but for sky-high city restaurant prices.
If you find yourself wandering the inner Reykjavík streets at the oddest of hours, the local stable Krambúðin at Skólavörðustígur (a stone's throw away from Hallgrímskirkja Church) recently became a 24/7 store. They’re cheaper than 10-11, and their selection is much more organic.
You might also have heard that Iceland just saw it first Costco Supermarket open for business, but that is an endeavour more intended for locals, who do flock there because of the incredible price drop.
However; you need a membership card to enter, and the store’s location is quite a way off from the centre, meaning you’ll spend more money on transport if you don’t possess a car.
Credit: Hlemmur Square Facebook
As for the case of alcohol, Iceland’s relationship with it is a rather complicated one. Prohibition is part of the country’s only recent history, and although Icelanders do like to wet their whistle, the accessibility is rather limited according to international standards.
Alcohol only sells in the state-run liquor store known as ÁTVR or Vínbúðin (the locals call it ‘ríkið’ or ‘the state’), which is only open during office hours. If you plan on going out, or even staying in, you are advised to stock up beforehand. Even in these state-run stores, taxes are high, so an even better bet is to shop duty-free at the airport when you arrive.
Photo courtesy of Skúli Craftbar
You should also watch out for what appears to be beer on the shelves of local supermarkets - it's not. It's a product designed to have the taste and appearance of the beverage but contains little to no alcohol content.
Despite all of this, you really can’t avoid hitting the streets at some point, and you shouldn’t since Reykjavík boasts of over 50 quality bars and pubs that are a joy to visit. Although the prices are high (roughly 1,000 ISK for a pint), Reykjavík luckily boasts of a vibrant happy hour culture, where you can hit the bars at the correct times for the best prices.
Don’t expect to save money on shots, mixers or cocktails since those rarely fall under the happy hour listings. If beer is not your drink, most happy hours include the house red and white.
Photo by 'Jonathan McIntosh' - Wikimedia Creative Commons
As for the case of coffee, everybody's favourite nectar of energy, you are advised to also consider it an odd treat as opposed to a daily buy. A cup of latté or cappuccino estimates at 600 ISK, tea at around 400 ISK (usually with free hot water refills) and a regular black coffee goes for anything from 200-500 ISK.
There are a few ways to get around this. Since Iceland is one of the biggest coffee-consuming nations in the world, your accommodation might very well include it as complimentary. You'll also find free cups of coffee at most banks and some grocery stores, such as Víðir or Bónus, intended for customers.
Last but not least; avoid buying bottled water. The water in the taps of Iceland is some of the cleanest and purest in the world, so unless you are situated in a dubious public bathroom with a warning sign on the sink, it is always safe to drink. Just bring a water bottle with you, and rest assured that every honourable establishment will happily refill it for you.
Photo by 'josef knight' - Wikimedia Creative Commons
When it comes to shopping in Iceland, the estimation ultimately depends on what you're here for and what you're willing to spend. Although enjoying Iceland is not solely reserved for the wealthy, shopping here might very well be.
Fashion wear in Iceland is taxed through the roof; for instance, a pair of Levi's jeans is sold with roughly 40% markup in comparison to Scandinavia and the UK.
In fact, most locals prefer to do their biggest shopping online or abroad, heading to discount stores in Copenhagen or Berlin in unison with their travelling plans. Icelanders also love to hunt for discounts and sales, in which case the two Reykjavík shopping malls Kringlan and Smáralind are the prime destinations.
Flickr photo of Kolaportið by JForth
The city offers a wealth of local design stores, each holding unique and hand-made garments, but for a handsome price. Shopping vintage is another option, where the underivative Fatamarkaðurinn beats the trendy Spútnik! in being economical.
You can also head to Kolaportið Flea Market - the only place in Reykjavík where you can practice the art of haggling. The market is only open during the weekend, so if you want to pay next to nothing for an Icelandic "lopapeysa" or vintage wear, roam the aisles just before closing on Sunday when the prices drop to near giveaways.
If you're looking for souvenirs, the so-called "puffin shops" that litter the local streets might promise a bargain deal on authentic Icelandic memorabilia, but in fact, they are specially tailored tourist traps that only sell mass-produced plastic ornaments from China.
These shops are also driving out local businesses, so you should rather hunt for the much more authentic souvenirs at the National Museum gift shop, the Handknitting Association of Iceland, or the aforementioned Kolaportið Flea Market.
Besides, the best memories you can buy are the numerous adventures you will embark on and all the stunning natural sights you will behold. Just remember to pack a camera, and you can bring all those memories back with you.
The best things in life are free, they say. The Icelandic nature boasts of wonders unparalleled to anywhere else in the world; it is a place where the geothermally active terrain of hot springs and geysers meets with rural coastal villages, in contrast with wild and uninhabited Highlands.
Although feasting your eyes on these marvels comes at no cost, you still need the means to get there and a place to stay, as well as the proper gear and guidance. Nature isn't only there to be looked at; you can and should participate in activities offered to experience it fully.
So when you head to, for example, Þingvellir National Park, a rift valley at the conjuncture of two tectonic plates, you can add significantly to that experience by going snorkelling in Silfra Fissure. Or if you visit Skaftafell National Park, home to the largest ice cap in Europe, you can embark on a glacier hike, go ice-climbing, or venture inside an ice cave.
Luckily, Iceland offers an array of guided services to make all of these activities available to visitors. This is the case even with a celestial phenomenon like the Northern Lights. Though they appear in the winter sky off their own accord, there are people who work around the clock to calculate their arrival for you, by using solar wind readings and weather forecasts. If that fails, most companies offer you compensation for your tour.
That compensation usually allows you to embark on the same tour a different night to try your luck again. It is therefore wise, if the lights are at the top of your bucket list, to book a Northern Lights excursion for the beginning of your stay.
Tours differ greatly in expenses, but our advice to you is to book packages, as one adventure will undoubtedly leave you thirsty for more. If you buy your tours one at a time, the costs will add up a lot faster than if you allow the experts to join a few together for you.
Iceland also offers endless possibilities for hiking and trekking, where you can explore the vastness of the highlands over the course of a few days while staying in cabins in between. Hikes are a summer activity, but you still need to possess warm clothes, good hiking boots and food, since there are no shops around.
Remember to always make a travel plan and then leave said plan at safetravel.is, found here, so you can be located and rescued if you get into trouble. The nature of Iceland should not be underestimated, but if you follow the proper guidelines, you should be fine.
Besides from embarking into the wild, there are also plentiful opportunities to sightsee within municipal limits. The capital of Reykjavík possesses a myriad of museums and sights, some of which are free of charge and some of which you can save a buck at when visiting by purchasing passes.
The Reykjavík City Card is an economical and excellent way to get the most out of your stay in the capital, providing entrances to a great selection of galleries and museums, as well as all swimming pools in Reykjavík and public transport. The pass also provides you with a discount on multiple tours and services for when you want to leave town, meaning you won't only save money if you stay in the city.
We hope this article has given you an idea of the different expenses and possibilities when travelling in Iceland. There's nothing left now except to present you with estimated budgets, as to better your abilities to plan the journey of your dreams.
The Backpacker's approach to travelling in Iceland includes no essential transport except a round trip with the airport shuttle Flybus. Otherwise, they can hitchhike.
They would camp in the city, where the night goes for 1,900 ISK, provided they book the whole week. Included are a couple of additional spendings, such as electricity rent or using a washing machine once.
This person would cook their own meals, where 8,000 ISK should buy them groceries for the week. When we throw in two 72 hour City Cards, showers are covered with daily trips to one of Reykjavík's geothermal swimming pools.
Week's expenses of this approach come to 41,100 ISK, or 5,900 ISK a day.
Extra: Backpacker's Splurge
With one night out, one night eating out and one budget tour such as a Golden Circle Minibus Tour, the estimation rises to 56,200 ISK for the week, or 8,000 ISK per day.
The Minimalist's approach includes hostel accommodation at 4,000 ISK per night, where cooking facilities enable them groceries for the week for 5,000 ISK. Let's throw in a case of Icelandic beer for 1,890 ISK to keep the fridge stocked!
This individual would go to a Café a couple of times and eat out once, as well as allowing themselves the purchase of one Combo Tour such as Whale Watching and the Golden Circle for 19,900 ISK.
Week's expenses of this route come to 65,600 ISK, or 9,400 ISK a day.
They would hit a Café three times, eat out maybe four times and buy additional groceries for 8,000 ISK. They might purchase a couple of meet-on-location tours such as Horse Riding and Dinner in North Iceland for 15,900 ISK and Small Group Silfra Snorkelling Adventure From Þingvellir for 14,900 ISK.
The Traveller makes use of their 4x4 car to explore the Highland roads and sightsee the wild nature of Iceland, as well as staying outside Reykjavík for several nights.
A week like that would come to 172,000 ISK, or 24,700 ISK for the day.
The Big Spender might book a nice hotel for 30,000 ISK per night and a cottage in the countryside for 15,000 ISK per night. That way they could enjoy the full extent of the land as well as the municipalities and capital city.
They would rent a luxury car for seven days at 12,000 ISK per day and go on three different Combo Tours for 60,000 ISK.
They might hit a Café five times during the week and eat out every night. They wouldn't hesitate in matching their meals with wine and quality craft beer, which doubles restaurant expenses.
The Big Spender could, of course, spend a whole lot more, but this data is meant to showcase a week where the goal isn't to spend money, but see Iceland off a budget.
This approach would leave the week at 330,000 ISK or 47,000 ISK per day.
Extra: The Big Spender's Splurge
If this individual wants to splurge, the sky's the limit. Why not add a helicopter tour with a touchdown on Langjökull Glacier for 125,400 ISK?
Now that you've seen the different approaches to estimated Iceland budgets, you can compare the costs with self-drive tours and all-included travel packages.
A week's self-drive tour around the whole country, with a car, accommodation, breakfast and a Blue Lagoon voucher such as this one is 130,000 ISK, where added meals and gas expenses would bring the estimation to 20,000 ISK a day.
This would top the Traveller's approach - while including more comforts and a lot more sightseeing. There are also budget self-drives such as this one available for 89,000 ISK that don't include breakfast or vouchers - ideal for the Minimalist!
An all-included package such as this one offers Reykjavík accommodation for five nights, one night at a country hotel, two bus tours and a Blue Lagoon voucher, all for 135,000 ISK.
Add a few night outs to that, and the estimation would come down to 25,000 ISK per day, which matches the Traveller's approach and tops the Big Spender route by miles in being economical. The selection goes on and on, but this should give you an idea.
PLEASE NOTE that all prices listed are subject to change. We'll do our best to keep them updated so they show the correct information. If you have any additional questions on costs of travelling in Iceland, don't hesitate to place your questions in the comments below and we will answer them right away.