How To Visit Iceland On a Budget: A No-Fluff Money-Saving Guide

Iceland has a reputation for being pricey. But after four epic trips to the “Land of Fire and Ice,” I’ve found plenty of ways to stretch a travel budget without missing the glaciers, waterfalls, and hot springs that make the trip worth it. This Iceland on a budget guide covers where to see real savings and the mistakes I made so you don’t have to.

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How Much Does Iceland Cost Per Day?

Budget travelers should plan for roughly $150-$200 USD per day.

Mid-range travelers should plan for $300-$400 per person per day, covering lodging, dining, and activites. This does not include car rentals or gas.

For context, Numbeo’s Cost of Living Index ranks Iceland the 7th most expensive country to live in, behind Bermuda, Cayman Islands, and Switzerland.

Is Iceland Worth It on a Budget?

Yes! Despite the initial price tag shock, visiting Iceland is (absolutely) worth it.

It’s stunning scenery from majestic waterfalls to glaciers, lava caves, lagoons and geysers, make it an unforgettable travel destination. My love for Iceland runs deep and it’s is a big reason why I’ve visited three times so far.

Iceland Money-Saving Tips To Experience Iceland On A Budget

As mentioned, 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 Iceland is 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 to Iceland cheaply, 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

What are the cheapest months to visit Iceland?

Despite visiting Iceland three times, I’ve yet to visit in the summer because it’s significantly more expensive.

For the most savings, consider visiting Iceland during the shoulder seasons of Spring (April to May) and Fall (September to October). During these times, flight and accommodation prices tend to be lower, and you can still enjoy mild weather and fewer crowds.

2. Stay in the city center

While it can be tempting to stay outside of the city center, this is not practical. To save time, energy, and money, staying in the city center is best, where everything is easy to get to on foot.

I also recommend booking your accommodation way in advance because rooms sell out quickly.

Lastly, instead of switching hotels as you explore Iceland, plan to stay at one centrally located hotel and plan day trips to the South Coast of Iceland, Golden Circle, and Snæfellsnes Peninsula.

3. Stay at hostels

Accommodation in Iceland is generally pricey all year round. Staying at a hostel or guesthouse is an easy way to save money on lodging. Reykjavík has a vibrant hostel scene, catering to different preferences and budgets.

Most hostels in Reykjavík are centrally located near shopping, attractions, restaurants, and nightlife. They often have an on-site bar and common areas for socializing where you can meet other travelers and make new friends. Not to mention the shared facilities, such as a kitchen equipped with pots and pans, and laundry facilities.

Here’s a list of the best hostels in Reykjavík:

• Best Overall Hostel in Reykjavík – Loft HI Eco Hostel
• Best Hostel For Fun Party Atmosphere in Reykjavík – Kex Hostel
• Best Hostel Near Public Transportation in Reykjavík – Bus Hostel

4. 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. 

How To Save Money On Iceland Airport Shuttles

This tip routinely saves me 5-10% on each airport shuttle booking.

Google “Gray Line promo codes” or “Flybus promo codes” to see if you can use any available coupon codes. While this trick doesn’t always work, I’ve been successful for all three trips to Iceland.

5. 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. 

Listen to this podcast episode for everything you need to know about booking stopovers.

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6. 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.

7. 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.

8. 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

9. 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.   

10. 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.

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:

• LifeStraw Go Water Filter Bottle
• CamelBak Chute Mag Water Bottle

12. Shop at supermarkets

Wondering how to save money on food in Iceland?

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!

Tired of reading? Listen to the podcast episode on Spotify here:

16. Swim at local swimming pools

Highly recommended by Eric (Eiríkur) from CityWalk Reykjavík, 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’s 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!

Visit the Sun Voyager along the waterfront, which pays homage to the first Icelanders. Although it looks like a Viking ship, it’s 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.

17. 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.

18. 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 1390 ISK ($11 USD), climb to the top of the tower and see 360-degree views of Reykjavík, the harbor, and Mount Esja.

19. 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 Reykjavík. 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.

20. Discounted drinks at Happy Hour

The Loft Hostel is a great place to meet other travelers, enjoy live music, or take in awesome views of the neighborhood from the patio.

They also have Icelandic and Scandinavian beers on tap.

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.

I shared my favorite Iceland budget hacks on the Bon Voyage Besties Podcast — tune in for even more practical tips on traveling to Iceland without breaking the bank.

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Danielle Desir Corbett

Danielle Desir Corbett is an award-winning and 6x grant-funded travel writer and podcast host who went from financial struggle to visiting 27+ countries all without waiting until retirement. Her story is proof that budget doesn’t limit adventure. Tune into The Thought Card Podcast for practical strategies to travel smarter and live on your terms. Say hello: thethoughtcard (at) gmail (dot) com.

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