Iceland Is Not Cheap: How to Save Money in Iceland

While Iceland can be an expensive 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, here are nine easy ways to save money in Iceland. Check out my travel guide Iceland: Nature, Nurture, and Adventure for even more Iceland travel planning tips.

How to Travel To Iceland On A Budget

1. 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. 

2. 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. 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.

3. 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. You can 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 for Your Trip

4. 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.   

5. Find Appy Hour

To help you find the best drink deals in Reykjavík, download Appy Hour, a mobile app that lists all the happy hour specials happening throughout Reykjavík. Locations are listed based on proximity and price.

6. Bring 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

7. 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. 

8. Skip the Tip

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.

9. 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.

Want to plan the perfect trip to Iceland? Check out my Iceland travel guide for adventurous 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!

Click here to get the Iceland travel guide.

Next, listen to this episode where I share even more practical tips for saving money in Iceland.

You can also listen to this episode on Apple Podcasts, Google Podcasts, Spotify, etc.