At a glance: Cards are accepted virtually everywhere. You can visit Iceland without touching cash. Tipping is not expected or customary. Budget roughly $100 to $150 per day for budget travel, $200 to $300 per day for mid-range comfort.
Iceland is expensive. There’s no way around it. But understanding how money works here helps you manage costs while still having an exceptional experience.
The currency is the Icelandic Króna, abbreviated as ISK or written as “kr” after amounts. Exchange rates fluctuate, but as a rough guide: 1 USD equals approximately 140 ISK, 1 EUR around 150 ISK, 1 GBP roughly 175 ISK. Icelandic numbers use periods as thousands separators, so a price written as 1.500 kr means 1,500 krónur, about $10 to $11 USD.
Iceland has essentially become a cashless society. Credit and debit cards work everywhere: restaurants, gas stations in the middle of nowhere, hot dog stands, even most rural swimming pools. You can genuinely visit Iceland without touching cash at all. Visa and Mastercard are universally accepted. American Express works at many places but not all. Contactless payment, Apple Pay, and Google Pay function widely.
Before you travel:
- Notify your bank to avoid fraud blocks
- Know your PIN (chip and PIN is standard here)
- Bring a backup card from a different bank
- Check your foreign transaction fees (some cards charge 3%, others nothing)
Cash becomes necessary only in rare situations: the occasional farm stand, some rural pools, or as emergency backup. If you need cash, ATMs at airports, banks, and shopping centers offer reasonable rates. Use a debit card for withdrawals rather than credit cards, which charge high cash advance fees. Avoid currency exchange kiosks. Their rates are poor.
Typical costs run higher than most visitors expect. A restaurant main course costs ISK 3,500–6,000 ($25–45). A fast food meal runs ISK 2,000–3,000 ($14–21). Coffee is ISK 500–700 ($3.50–5). Beer at a pub costs ISK 1,200–1,800 ($8–13). The famous Icelandic hot dog, pylsur, remains one of the best values at ISK 500–700 ($3.50–5).
Accommodation ranges widely. Hostel dorms run ISK 5,000–8,000 ($35–55) per night. Budget guesthouses cost ISK 15,000–25,000 ($100–180). Mid-range hotels fall between ISK 25,000–40,000 ($180–285). Luxury properties start at ISK 50,000 ($350) and climb from there.
Rental cars cost ISK 8,000–15,000 ($55–105) per day for a compact. Fuel runs ISK 280 to 320 per liter, roughly $2 per liter or $7.50 per gallon. Activities add up: Blue Lagoon entry costs ISK 8,000–15,000 ($55–105), whale watching ISK 12,000–18,000 ($85–130), glacier hiking ISK 15,000–25,000 ($105–180).
Saving Money
Tipping is not expected or required in Iceland. Service charges are included in prices. Staff earn good wages. If you receive exceptional service, you might round up or leave a small tip, but there is never any obligation, and tipping feels slightly unusual to Icelanders.
The biggest savings come from food:
- Shop at Bónus, Krónan, or Nettó supermarkets
- Eat your main meal at lunch (restaurants often offer better prices)
- Fill water bottles from taps (Icelandic water is excellent and free)
- Pack snacks for day trips
- Hot dogs and soup remain affordable restaurant options
For accommodation, booking early secures better rates. Camping works well in summer. Staying outside Reykjavik reduces costs. Shared kitchens in guesthouses let you cook. Many natural attractions are free. You can hike anywhere, visit most waterfalls, and find free natural hot springs if you research locations.
Worth splurging on: one special meal at a top restaurant, key experiences like glacier hiking or ice caves, quality waterproof clothing that lasts, and private tours for unique access and local knowledge.
Rough daily budgets run: $100–150 for budget travel with hostel or camping, self-catered meals, free attractions, and a shared compact rental car. $200–300 for mid-range comfort with guesthouses, a mix of restaurants and cooking, paid activities, and a standard rental. $300–500 for comfortable hotels, restaurant meals, multiple activities, and quality vehicles. $500+ for luxury hotels, fine dining, premium experiences, and private guides.
When paying by card, always choose to pay in ISK rather than your home currency. Selecting your home currency triggers dynamic currency conversion with poor exchange rates. Use debit cards for cash withdrawals if needed. Keep receipts for budgeting. And for purchases over 6,000 ISK from participating stores, ask about tax-free shopping. Visitors can reclaim 15% VAT at the airport when leaving with unused goods.
Contact us for help planning a trip that fits your budget.
