Traveling Iceland on a budget: This Iceland travel guide shares how to save money in Iceland, how to travel Iceland cheap, and cheap places to eat in Reykjavik.
While Iceland can be a pricey travel destination, after three epic trips to the “Land of Fire and Ice,” I’ve found plenty of creative ways to stretch my Iceland travel budget. If you’re interested in planning a trip to Iceland on a budget, there are plenty of ways to save money in Iceland. Here I share money-saving Iceland tips, including making the most out of happy hour specials in Reykjavík and how visiting off-season can save you money.
Listen to the podcast episode here:
Also, check out my Iceland travel guide Iceland: Nature, Nurture, and Adventure (available on Amazon) for even more Iceland travel planning tips. From what to pack to things to do in Iceland, this travel guide shares how to plan an affordable, adventurous, and culturally enriching trip to Iceland. Written with Black women in mind, it encourages Black women and other People of Color to visit Iceland and experience Iceland’s natural wonders, unique food, and rich culture.
Iceland Money-Saving Tips To Experience Iceland On A Budget
Iceland has a reputation of being an expensive travel destination. It’s generally considered to be one of the more expensive countries in Europe with the cost of living and travel expenses being notably higher.
If you’re wondering why is Iceland so expensive, here are a few factors that drive up the prices.
Situated far from mainland Europe, its remote location makes transportation costs, including flights and shipping, relatively high. Also, due to the harsh climate and volcanic terrain, Iceland has limited agriculture capacity, making importing food and other goods both necessary and expensive.
Lastly, everyone wants to go to Iceland. Have you seen photos and videos of Iceland’s stunning natural landscape?
Iceland is home to glaciers, volcanoes, caves, geothermal hot springs, waterfalls, and black sand beaches. An increase in tourism is driving up demand for accommodation, tours, car rentals, etc.
Despite the high costs, you can travel Iceland cheap, but you have to know what to look out for, and how to make the most of your Iceland travel budget.
1. Travel during shoulder season
Despite visiting Iceland three times, I’ve yet to visit in the summer because it’s significantly more expensive to visit during that time. For the most savings, consider visiting Iceland during the shoulder seasons of Spring (April to May) and Fall (September to October). During these times, you can still enjoy mild weather and fewer crowds. Accommodation and flight prices tend to be lower too.
2. Stay in the city center
While tempting to stay outside of the city center, this is not practical in Reykjavik. To save time, energy, and money, it’s best to stay in the city center, where everything is easy to get to on foot.
I also recommend booking your accommodation way in advance because rooms sell out quickly.
3. Take airport shuttles instead of taxis
Firstly, Uber and Lyft are not available in Iceland.
While there are taxi services, they are pricey and you will not know how much of a bill you’ve ran up until the end of the ride.
The most cost-effective and convenient way to get to/from the airport is via airport buses like Flybus Airport Transfer or Grayline Airport Express. For the most savings, book a reservation online ahead of time. They depart frequently.
Booking a bus costs a fraction of the price of a private transfer. You’ll get on one big bus which takes you to the local bus terminal where if you paid additional you’ll be taken to your hotel via a separate mini bus.
4. Free stopover
Did you know that you can fly to Iceland for free?
If you book any transatlantic flight with Icelandair, you can “stopover” in Iceland at no additional cost for up to seven days. This is a great way to save on airfare and check out multiple destinations.
5. Rent a car
When visiting Iceland, plan to venture outside of Reykjavík to explore the country’s natural beauty – waterfalls, caves, glaciers, volcanoes, and more.
Since there is no public transportation outside of Reykjavík, consider renting a car. If you are traveling with a friend or in a group, splitting the cost of a rental is a great way to save money in Iceland.
Alternatively, renting a campervan can provide cost-savings since you’re combining transportation and accommodation costs.
I recommend planning a day trip to the South Coast of Iceland to visit the black sand beaches of Vík and snorkel at Þingvellir National Park.
6. Get additional car rental insurance
While it might seem like an extra expense, having comprehensive coverage can provide peace of mind and financial protection just in case you encounter rough terrain, icy roads, or the volcanic gravel rock cracks your windshield, which happens quite often.
7. Go cashless
Like most countries, Iceland is a card-friendly place. While there’s nothing wrong with paying with cash, most people in Iceland pay with either a debit card or credit card.
By going cashless, save money by avoiding fees at currency exchange kiosks and ATMs.
Use your credit card for all purchases and rack up those points and miles. Later redeem them for free flights, seat upgrades, hotel stays, and other travel perks. Just make sure that you’re using a credit card with no foreign transaction fees.
Lastly, pay off your credit card balance with your travel fund when you get home.
Read Next: How To Budget a Trip
8. Shop Duty-Free Iceland
Alcohol is expensive in Iceland. Since Iceland taxes alcohol based on the alcohol content, the stronger the spirit, the more it will cost. One way to save money on alcohol in Iceland is to buy drinks during happy hour, but I will share more later.
Another way to save money on alcohol in Iceland is to swing by Duty-Free Iceland before leaving the airport.
Duty-Free Iceland offers discounted prices on domestic and international spirits. This shop is only located at Keflavík International Airport.
One more thing, Duty-Free Iceland limits visitors to six units of alcohol. To figure out the specifics, check out this helpful alcohol allowance calculator.
9. Pack for the season
The last thing you want to do is get to Iceland and have to purchase expensive clothing and gear because you forgot them at home. Welp, this happened to me on my first trip to Iceland!
I forgot my winter coat, and since it was so cold, I had to rush over to the mall and purchase a waterproof jacket for nearly $200 USD.
So do your research and pack appropriately for the weather which typically means layered clothing, warm sweaters, hats, gloves, thick socks, and comfortable walking shoes.
10. Find ‘Appy Hour’
To help you find the best drink deals in Reykjavík, download Appy Hour, a mobile app that lists all the local happy hour specials happening throughout Reykjavík. Locations are listed based on proximity and price.
11. Bring reusable water bottles
Another way to save money in Iceland is to bring your bottle and fill it up with tap water. For one thing, it’s free.
Secondly, water in Iceland is drinkable, and it is never chemically treated and naturally purified through molten rocks. You might be surprised to find out that bottled water in Iceland is a waste of money because it’s the same water from the tap.
Best water bottles for travelers:
12. Shop at supermarkets
Save money on food in Iceland by shopping for groceries at local grocery stores like Bónus and Krónan. Both stores carry a variety of snacks, drinks, and many other items you might need during your stay. Avoid grocery stores like 10/11 and Kvosin Supermarket, which are notoriously more expensive.
13. Cook your own meals
While experiencing Icelandic cuisine is important (and recommended), dining out for every meal can quickly add up. Balance dining out by preparing your own meals whenever possible which means staying at a hostel or guesthouse that offers a kitchen.
To save on food costs, opt to stay at a hotel which offers complimentary breakfast, make a simple pasta dish for lunch, or take advantage of discounted lunchtime specials. Grab dinner at a restaurant.
14. Skip the tip
Do you tip in Iceland?
When you eat out in Iceland, skip the tip. Unlike most countries where tipping is the majority of the staff’s earnings, tipping isn’t customary here because the “service charge” found on the bill covers tipping.
15. Get taxes back
Lastly, after a wonderful trip, Iceland allows visitors to get a portion of their taxes back. If you go shopping in Iceland, claim your tax-free refund at the airport before you head out. Since this process is involved, use this Iceland tax-refund guide.
Is Iceland expensive to visit? Want to plan the perfect trip to Iceland?
Check out my Iceland travel guide for travelers interested in planning an affordable and culturally enriching trip. Get practical advice on the best things to do, tips for renting a car, the best foods to try, and more!
Get the Iceland travel guide on Amazon.
Listen to the podcast episode on Spotify here:
Next read how Natasha visited Iceland on the cheap and saved thousands of dollars!
Saving Money in Iceland With Free Things To Do In Reykjavik
Despite Iceland’s high costs, there are lots of free things to do in Reykjavík and cheap things to do in Reykjavík too.
1. Go on a free walking tour
The free walking tour with CityWalk Reykjavik was one of the first things I did when I arrived in Reykjavík. This two-hour historic tour offers a great introduction to the capital city and Icelandic culture. The insightful guides are Icelandic history graduates and high school teachers. The tour was fun and engaging.
During the tour, visit the most historic parts of downtown Reykjavík including Arnarhóll and Fógetagarður Square.
At the end of the tour, set your own price. Tip what you feel the tour was worth – these guys deserve it. You can even tip in any currency you like which is super convenient!
Bonus Tip: CityWalk Reykjavik sends you a comprehensive city guide after your tour. Many of the suggestions include free things to do in Reykjavik on a budget.
2. Visit historical monuments
Unless you’re touring Reykjavík with a knowledgeable local or historian, it’s easy to miss the less popular historical sights but Reykjavík is studded with all types of monuments that commemorate founders, leaders and important events in Iceland.
Here are a few of my favorites:
- Arnarholl Hill & Statue of Ingolfur Arnarson commemorates the first permanent Scandinavian settlers in Iceland.
- Statue of Leif Eriksson in front of the Hallgrimskirkja Church honors Leif Eriksson, the first European to explore the North Americas.
- Vikurgardur or Fógetagarður Square is now a public space but it was formerly the home of the old Reykjavík Church and the site of Reykjavík’s oldest cemetery.
For the complete list, check out the historic spots in Reykjavik that you probably don’t know about.
3. Spot street art and wall murals
You can find street art all over Reykjavík, just look on the sides of the buildings. Each mural tells a story and makes a bold statement.
4. Take a scenic walk around the lake
There are plenty of swans and ducks to admire at Tjörnin so bring your camera. When you’re done, head over to the Reykjavík City Hall. On the main floor, there is an impressive 3D topographic map of Iceland.
5. Sunset at Solfar Sun Voyager
As you enjoy the cool breeze, marvel at the rainbows and a gorgeous view of snowy Mount Esja and snap photos with this iconic Icelandic landmark.
6. Walk around Harpa Concert Hall
Right in the city center at the old harbor, visit the Harpa Concert Hall which holds concerts and shows throughout the year. This architectural masterpiece has a stunning glass facade that illuminates at night.
This is a good place to take a few photos and wander around. The free areas are limited and there are paid guided tours (4,900 ISK and it is free for 12 years and younger) that go over the design and what makes the building unique.
Cheap Things To Do in Reykjavik
1. Swim at local swimming pools
Highly recommended by Eric (Eiríkur) from CityWalk Reykjavik, I skipped the Blue Lagoon and instead chose a more local bathing experience at Vesturbaejarlaug swimming pool. For more options, check out some of the other affordable swimming pools and hot springs in Iceland.
Less than a half an hour walk from the city center, at Vesturbaejarlaug, I enjoyed hot tubs and steam baths alongside locals for 900 ISK ($8 USD).
Before entering the pool I had to shower naked (in front of the other female patrons) but it was totally fine. No need to be shy. I did not feel uncomfortable in any way.
In fact, bathing at Vesturbaejarlaug was one of the most relaxing experiences I had in Iceland. Nevertheless, I have to warn you, be ready to run for your life when getting out of the water!
Along the waterfront, visit the Sun Voyager which pays homage to the first Icelanders. Although it looks like a Viking ship, it’s actually a dreamboat following the setting sun.
For more ideas on ways you can explore Iceland on the cheap, read how Natasha spent seven days in Iceland and spent only $100.
2. Try all types of Skyr flavors
Not to be mistaken for yogurt, Skyr (pronounced skeer) is a dairy product made in Iceland. I loved the light and smooth texture. To save money, I suggest heading to the local grocery store instead of ordering Skyr at a restaurant.
Try unique flavors for 200 ISK ($2 USD).
Wondering how much other snacks and food costs in Iceland, here’s a full breakdown.
3. Climb to the top of Hallgrimskirkja Church
You can see the Hallgrimskirkja Church from just about anywhere in Reykjavík.
Admission to the church is free but for 900 ISK ($8 USD), climb to the top of the tower and see 360-degree views of Reykjavík, the harbor, and Mount Esja.
4. Cheap food in Iceland like Bæjarins Beztu Pylsur
Operating since 1937, Baejarins Beztu Pylsur is a popular hot dog stand and one of the cheap places to eat in Reykjavik. Since food is very expensive in Iceland, these famous hot dogs are an affordable option.
Don’t let the long lines scare you, it moves quickly. Sorry, if you’re a vegetarian, you’re out of luck here.
Gas stations, bakeries, and food trucks are other great options for more affordable quick bites.
5. Discounted drinks at Happy Hour
The Loft Hostel is a great place to meet locals, enjoy live music or take in awesome views of the neighborhood from the patio. They also have Icelandic and Scandinavian beers on tap. If you are into ciders, try the Somersby Cider.
Happy hour starts at 4 p.m. and ends at 8 p.m daily.
Although alcohol is expensive in Iceland, taking advantage of happy hour specials is a great way to experience Reykjavík on a budget.
Helpful Tip: Speaking of happy hour, download the Reykjavik Appy Hour app and discover all of the happy hour specials happening throughout Reykjavík in real-time. The app displays the establishment’s description, the happy hour duration and prices for drinks.
Looking for more ways to save money in Iceland? Listen to this episode for ideas on how you can do Iceland on a budget.
What are your favorite free things to do in Reykjavík?
Danielle Desir Corbett paid off $63,000 of student loan debt in 4 years, bought a house at 27, and has traveled to 27 countries, including her favorites, Iceland, China, and Bermuda. Go here to learn Danielle’s incredible story, from struggling financially and in debt to finding creative ways to earn more and live on her terms. Listen to The Thought Card Podcast, where Danielle shares how you can creatively travel more and build wealth regardless of your current financial situation. Reach out to Danielle by contacting: thethoughtcard (at) gmail (dot) com.