Iceland is a country of many wonders and unique charms, and another thing unique to Iceland is their national currency. It is actually the second smallest country by population, after the Seychelles, to have its own currency and monetary policy.
As with going to any foreign country, making sure you understand the currency and any intricacies of spending money in that country is essential for a stress-free trip, which is why we have created this complete guide to give you peace of mind when spending money in Iceland.
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The official currency of Iceland is the Icelandic króna (ISK).
Because the numeric value of króna is quite high in comparison to US dollars or euros, mental arithmetic can be slightly more challenging than what you’re used to. After a few days of staying in Iceland and using króna it should be fairly easy to get your head around.
The coins come in denominations of 1, 5, 10, 50 and 100. The króna is divisible into aurar (cents), although these are no longer accepted tender and it is hugely unlikely that you will come across any on your trip.
Króna notes are available in 500, 1.000, 2.000, 5.000 and 10.000. As you can see, Iceland uses a decimal point rather than a comma in longer numbers (1.000 vs 1,000), and this is also how you will see prices displayed in stores across the country.
You may occasionally come across price lists or hear shopkeepers mention “crowns” instead of “króna”. Don’t panic - both refer to the currency and are sometimes used interchangeably.
Because the Icelandic króna is only traded internally, few banks outside of Iceland keep a stock of it and so exchange rates are usually quite high.
There is no obligation for Icelandic businesses to accept any currency other than Icelandic króna. Places regularly frequented by tourists such as restaurants, bars, hotels, and tours are the most likely to accept foreign currencies, although you should never rely on them taking anything other than ISK.
If you have the option to pay using a foreign currency in Iceland, know that the convenience may come at a cost and it’s highly likely that you will receive an unfavourable exchange rate. It is always best to pay using Icelandic króna or using your credit or debit card where possible.
As with travelling in any location, we’d recommend always carrying your credit or debit card in addition to an adequate amount of local currency in cash.
An unfortunate reality of Iceland is that it is notoriously expensive for both visitors and Icelandic citizens.
The high-costs and growing demand for holiday accommodation has led to many locals and homeowners in Reykjavík letting their properties through AirBnB. Although this creates lots of availability, many fear it will continue to contribute to difficult housing situations for locals, so it is preferred that visitors stay in formal accommodation like hotels and hostels, or even look to stay somewhere outside of the capital.
Another noticeably high cost that visitors encounter in Iceland is eating out. High prices aren’t just limited to fancy restaurants, and also takeaways are more expensive than elsewhere in the world. With the exception of bars, alcohol can only be purchased from state-run off-licences that are only open during office hours.
Visitors heading to Iceland should be aware that there are no Bureau de Changes. Unlike in other countries, you won’t find these wandering through town centres. Instead, we recommend exchanging your currency upon arrival at Keflavík International Airport (KEF) after you land. You can do this at Arion Bank located in the arrivals hall or at the desk in the departures hall. You can also pre-order your currency exchange and collect it within as little as four hours.
Another option is to head straight into Reykjavík and exchange your currency there. While there are no Bureau de Changes, you can go to regular banks during their opening hours and have your currency exchanged on the spot.
It is advisable to exchange all of the currency you need for your stay before leaving the airport or Reykjavík if you are then heading off into more rural areas where it will be much harder to find banks.
Below are the banks in Reykjavík that offer currency exchange services:
Visitors will be happy to hear that Iceland is extremely card-friendly. It is by far the most popular payment method in the country and card payment is accepted by nearly every shop, tour operator, restaurant, bar, taxi, and coffee shop.
The only time visitors tend to need ISK cash is to pay for entrance to bathrooms and hot springs. While for some visitors, paying to use public bathrooms is unheard of, it is actually very common not just in Iceland but in many other places in Europe too.
Bathrooms at many tourist sites have now added a place to swipe your debit or credit card to pay for entrance, but if you are heading off the main tourist routes or stopping at a smaller establishment, you may only be able to use coins or cash.
Similarly, some of the smaller hot springs that require a small entry fee, especially the ones on private property, can often only accept cash.
That being said, it doesn’t hurt to always have some local ISK cash to hand wherever you are going. It is always possible to encounter issues with card readers or disruption to the Visa or Mastercard networks that leads to cards not working.
Be aware that your bank may impose foreign transaction fees and you may be charged a small percentage on top of the retail price.
If you’re renting a car in Iceland, you will almost certainly have to stop for fuel at some point. While gas stations in urban areas often have a kiosk where you can pay with card or cash, some in more rural parts close early and some may not even have an attendant.
In situations where you need to refuel at an unmanned or self-serve station, you need to use a card with a pin. If you are planning on only bringing a credit card but do not have a pin, be sure to request one from your bank before you leave.
For more information on paying for fuel, check out our ultimate guide to renting a car in Iceland.
Anyone who has an American Express (AMEX) card knows that it is never guaranteed that a merchant will accept them, and the same applies to Iceland.
Places in Iceland that are likely to accept AMEX include:
If you are off the beaten path in Iceland and encounter a small store, don’t be surprised if they do not accept payments with American Express cards.
Prepaid cards are another popular payment option with travellers. Prepaid Visa currency cards can be picked up from banks and Bureau de Changes in your country of departure and be ready to use straight away upon your arrival in Iceland.
It is a great option for avoiding foreign transaction fees that you may encounter if you use your usual credit or debit card.
Plenty of retailers in Iceland accept Apple Pay and Google Pay as payment methods, and you will likely not run into any issues in Reykjavík. Be aware that smaller stores and those found in more rural locations may not currently be able to accept them, which is why it always recommended you have a backup payment method such as Mastercard, Visa, or some Icelandic króna.
As we have already touched upon, Iceland is a relatively cashless country, but it is always wise to carry around some króna in cash form.
There are plenty of ATMs in Reykjavík and several at Keflavík Airport for you to withdraw the local Icelandic currency.
Non-Iceland residents are eligible for tax-free shopping during their stay in Iceland on purchases of ISK 6.000 or above. As a result, Visitors will be able to receive up to a 14% discount on their shopping.
When making a purchase in store, you will need to request a tax-free form which the shop will provide you with. You need to complete this form in order to receive your refund.
To claim your tax-refunds, you will need to present your purchases, receipts, and completed tax-free forms at Keflavík Airport to have them stamped and validated before you check-in to your departing flight.
If your purchases cost between 6.000 and 100.000 ISK, then you can have them stamped by Arion Bank. Any purchase that costs more than 100.000 ISK should be stamped by customs.
If you aren’t leaving from Keflavík, you can still quickly get your tax refund. Whether you’re departing from Reykjavík Airport or by boat, customs officers will make sure to clear you before departure. You will have the chance to claim your tax refund, just remember to keep the receipts and items in the original purchase state.
Anyone staying in Iceland for an extended period may not be able to claim a tax refund. In order to be eligible, you have to leave Iceland with your purchases within 3 months of the date of purchase of the goods.
Your refund will be handed out in Icelandic króna that you can then exchange back to your local currency.
Many visitors may be surprised to find that Iceland does not have a tipping culture, so there is no need to have extra ISK cash to hand when in taxis, restaurants, bars, or taking. It may feel strange for those visiting from the UK and the USA where there is a strong tipping culture, but remember that people in Iceland are well paid and won’t expect a tip or feel underappreciated if you don’t give one.
That being said, if you want to give a tip or simply aren’t sure whether it’s appropriate, Icelanders won’t be offended and will take your tip graciously. Unlike in some other countries, a tip in Iceland will never be met with offence or an awkward refusal.
Not only is always carrying a refillable water bottle an environmentally beneficial choice, it will also save you money during your stay. Iceland’s tap water is perfectly safe to drink and filling up your bottle before heading out will save you money.
Hotels in Iceland are plentiful, but they can quickly eat away at your budget. If you are happy to do so, staying at a campsite or hostel can save you over half of the money you would spend for hotel accommodation, as well as allowing you to experience something new.
Campsites in Iceland can come with beautiful views as well as great facilities, all at the fraction of a cost of a hotel. Fear not, campsites are very safe and are a popular hit with holiday makers.
Hostels are also a great way to save money in Iceland if you are happy doing away with hotel amenities.
If you are on a tight budget, but still want to enjoy eating out in Iceland’s restaurants, you should consider going for lunch rather than dinner.
Restaurants in Iceland will tend to offer lunchtime specials that can be up to half of the price of what you would pay at dinner.
We have also put together a list of the best fast food restaurants in Reykjavik for the budget-conscious traveller looking for a tasty, fast and more importantly cheap meal in the capital.
Booking your rental car in advance is always advisable to get the best deal. You can also save money on your rental car by visiting Iceland at specific times of the year.
Car rental prices in Iceland are, on average, cheapest during the months of February, March, and November.
For the most affordable and quality rental cars in Iceland with unbeatable levels of insurance cover, book your rental car with Lotus Car Rental.