The Ultimate Iceland Budget Guide: How to Save Money on Your Trip

Picture of Svanhildur Sif Halldórsdóttir

Svanhildur Sif Halldórsdóttir

Are you planning a trip to Iceland? If so, the first question you’ll need to answer is how much money you should bring with you. Of course, the cost of a vacation to Iceland will depend on your individual needs and preferences, but there are some general guidelines that can provide an idea of what to budget for.

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Sunset behind the falling water of Seljalandsfoss Waterfall in South Iceland
Seljalandsfoss Waterfall

When planning your Icelandic trip, it is important to understand that it is not the cheapest travel destination. From flights and accommodation to food, transportation and entertainment, the costs of an Icelandic vacation can add up quickly. Therefore, budgeting ahead of time is key to ensuring you have enough money to cover all expenses during your trip.

The currency in Iceland is the Icelandic Krona or ISK. However, for the easement of our readers, We’ve decided to keep all prices in this article in USD.

Why Is Iceland such an Expensive Country?

An areal view of colourful houses in Reykjavik, Iceland
Reykjavik from above

Iceland is expensive due to several factors. Firstly, it is a remote island nation with a small population and limited resources, so many goods must be imported, making them more expensive.

Secondly, Iceland has a high standard of living and a robust welfare system, meaning wages and taxes are high. Additionally, tourism has boomed in Iceland in recent years, increasing demand for accommodation, food, and activities, which has driven up prices.

Finally, Iceland’s currency, the Icelandic Krona, is relatively weak compared to other currencies, making imports more expensive. Additionally, now in 2023, the inflation in Iceland is relatively high, which affects goods and services.

Average Costs for a Trip to Iceland in 2023

A man in Landmannalaugar, Iceland watching blue mountains and a rainbow
Landmannalaugar in the Highlands

The budget for a holiday in Iceland in 2023 can vary greatly depending on your travel preferences, the length of your trip, and the time of year you plan to visit. For an Iceland budget breakdown, here are some estimated costs to help you get an idea:

  • Flights: Depending on where you are travelling from, flights to Iceland can range from $185 to $2,000 USD per person round trip. This is quite a difference in prices, but it all depends on whether or not you need a connecting flight, what sort of baggage allowance you have, and if you’ve chosen a low-budget airline.
  • Accommodation: The cost of accommodation in Iceland can vary significantly based on the time of year, location, and type of lodging. Hostels and guesthouses can cost around $50-$100 USD per night, while hotels and resorts can cost upwards of $200-$500 per night.
  • Transportation: Renting a car for a self-drive trip is the most popular and convenient way to get around Iceland. The cost of renting a car can range from $30 to $200 per day, depending on the type of vehicle you choose and the length of your rental period.
  • Food: Food prices in Iceland can be quite high, especially for dining out. A meal at a mid-range restaurant can cost around $25-$50 per person, while fast food or street food can cost around $10-$20 per person.
  • Activities: Iceland is known for its outdoor activities, such as glacier hikes, whale watching, and northern lights tours. These can cost anywhere from $50 to $200 per person. However, some free activities are available, such as hiking or sightseeing.

Based on the above estimates, a 7-day trip to Iceland could cost anywhere from $1,000 to $4,000 USD per person, excluding airfare. Or around $150-$300 per person per day. It is important to remember that these are rough estimates, and the actual cost of your trip will depend on your travel style and preferences.

Accommodation Costs

The Northern Lights and snow-capped mountain through a window in Iceland
Northern Lights in a hotel window

When it comes to accommodation, Iceland offers a wide range of options for any budget. The average cost for a budget hotel room starts at around $50 per night, while luxury resorts can range from $200-500 per night. For those looking for something in between, guesthouses are an excellent choice, usually costing around $100-150 per night.

The season can also affect the prices of hotel rooms. Iceland’s high season is the bright summer months, June, July, and August, when most visitors come to the country. However, during Iceland’s low season, September to May, hotels lower prices to attract more people as demand is lower due to weather and darkness.

For the more adventurous, camping is a great way to save money in Iceland. There are over 100 campsites nationwide, with prices ranging from $10-25 per person per night, depending on the location. Note, however, that not all campsites are open year-round and that camping in the winter months can be very challenging.

Transportation Costs

A car driving on a gravel road towards a mountain in Iceland at sunset
Driving at sunset

The best way of getting around Iceland is by car. If you plan on renting a car and doing a self-drive tour, you should budget anywhere from $30-100 per day. This cost will depend on the type of vehicle you choose, whether it is automatic or has a manual transmission, and the length of the rental period.

When it comes to car rental, there are more factors to consider beyond the type of vehicle, such as insurance, mileage and other hidden fees. And let’s be honest; some car rentals’ reputations aren’t exactly squeaky clean. So by booking with a travel agency, such as Traveo—who only works with reputable car rentals—you can save yourself a lot of hassle and even some money.

Public transportation is also an option for those who don’t mind planning ahead. The pros of long-distance bus travel in Iceland are that they are cheaper and you don’t have to stress over driving in a new country. However, the cons are that the buses are infrequent, unreliable in bad weather, and there is a long wait between them.

If you don’t want to drive yourself but want to avoid the hassle of relying on public buses, a guided bus tour might be just the thing. A private tour with a personal driver and travel guide is also an option for the more luxurious travellers.

Food and Drink Prices

A table set with Icelandic meals by marina in Reyjavik Iceland
Dinner by the Harbour

Food and drink prices in Iceland can vary depending on where you’re eating and drinking, but there are definitely some great deals to be had.

Getting a decent dinner won’t have to break the bank. Although restaurant prices usually start from around $20-40 per meal, grabbing a quick bite from a fast food joint might cost about $15. For drinks, the average price is around $9-12 for a beer or glass of wine. Be sure to also watch for any happy hour deals or discounts that bars and restaurants offer.

A great way to save money on food while on a tour in Iceland is to go to grocery shops and get snacks or something to prepare yourself. The cheapest options are Bónus and Krónan, found all over the country. Note, however, that you might not find them in the remotest corners. So if you’d like to avoid pricy petrol station food, you might want to plan your stops accordingly.

Additional Activities and Attractions

A man standing inside an ice cave in Iceland
Photo: Small-Group Ice Cave Tour in a Super Jeep | Departure from Jökulsárlón Glacier Lagoon

Iceland has no shortage of activities and attractions to choose from! From taking a dip in the Blue Lagoon to exploring some of Iceland’s stunning national parks, you will surely find something that fits your interests.

Many of these activities are free, but some may require an admission fee or additional costs for equipment rentals. If you want to save money on activities, it pays to do your research ahead of time.

One way to save money is to look for discount deals and packages tour operators offer. Another way is to book activities for your visits in advance, as many attractions offer discounted rates for pre-booked tickets.

7 Best Budgeting Tips for Visiting Iceland

Travelers couple look at the Skogafoss waterfall in Iceland
Skógafoss Waterfall

Budgeting for a trip to Iceland doesn’t have to be complicated. With some research and planning, you can easily stretch your Iceland budget and make the most of your trip! Here are some tips to help you get started:

1. Research

Iceland, woman using laptop at the coast
Researching

When finding cheaper hotels and vehicles, research and compare prices to find the best deals. You can also search the web to find the cheapest flights to Iceland.

2. Visit Off-Season

Green Northern Lights behind Mt Kirkjufell in Iceland and reflecting in the lake in front of it.
Northern Lights behind Mt. Kirkjufell

Both accommodations and rental car prices are higher in the summer months during the high season. If you visit off-season, however, you’ll save a bit of money and have opportunities to see the Northern Lights.

3. Get food at Shops

Eating out in Iceland can get expensive quickly, so to cut the cost of food, get some snacks and drinks from Bónus or Krónan.

4. Pack Smartly

View of a road in Iceland from inside of a car with knitted hat on the dashboard.
Don’t forget your hat!

Think about all the activities you plan to do and the weather you might encounter while packing, like bathing in a hot spring or walking behind an amazing waterfall. This will help ensure that you have the items you need for your trip and avoid having to purchase them during your stay.

5. Get a Gas Discount Card

A road in Iceland with mountains in the backround
A road in Iceland

If you’re planning on driving in Iceland, one way to reduce the cost of your journey is to get a gas discount card. These cards, which you can get at selected gas stations, offer fuel purchase discounts, saving you money when driving around the country. Depending on the card provider, you may even be eligible for discounts at other attractions and services.

6. Book Early

Golden Circle & Snorkeling
Photo: Small Group Golden Circle Tour with Snorkelling in Silfra Fissure

If you know where you want to go and what activities you want to do, it’s best to book as early as possible. This will help ensure you get the best prices and guarantee availability for popular attractions. For example, the best time to book a holiday in Iceland is six months before your desired travel date.

7. Book with a Travel Expert

Traveo Homepage Logo

This might not sound like budgeting advice, but it is. If you’re planning a trip to Iceland and want to make the most of your time there, a respectable travel agent, like Traveo, can be a huge help. They’ll take care of all the details, from finding the best hotels and activities to planning out your itinerary. They will give you insider knowledge of Iceland so you can avoid unnecessary expenses, like booking accommodations far away from attractions or using a scammy car rental.

Furthermore, it’s important to consider the possibility of bad weather or unexpected disruptions to your itinerary. A travel agent can quickly react and find solutions to these challenges. This means you won’t have to worry about scrambling to come up with backup plans. And let’s face it, with Iceland’s reputation for unpredictable winter weather, it’s always good to have an expert on your side.

By letting a travel agent handle the logistics, you can save yourself days, if not weeks of research and planning, and have peace of mind knowing that everything is taken care of. Plus, you can potentially save money by getting access to exclusive deals and discounts through your agent. Click here for a FREE cutom itinerary proposal from Traveo!

5 Tourist Traps to Avoid in Iceland:

A man standing in front of mountains and glaciers in the Icelandic Highlands
Highlands

When visiting Iceland, it’s important to be aware of the tourist traps that can be found around the country. From car theft protection to bottled water, these traps can quickly take a bite out of your Iceland budget and leave you with a less-than-desirable experience. Here are some tourist traps to avoid when travelling in Iceland:

1. Paying for a Bottle of Water

While many grocery stores in Iceland sell bottled water, it is an unnecessary expense since it is the same water you get from a tap. If you bring a reusable water bottle, you can fill it up at any drinking fountain or tap and enjoy clean, safe drinking water all day. Icelandic tap water is one of the cleanest in the world, and, best of all; it is free!

2. Car Theft Insurance

A woman standing by a car by a road that leads to a church in Iceland
Chillin’

When renting a car in Iceland, rental car agencies will try to get you to purchase additional insurance, such as gravel or sand and ash protection. Although those sound like tourist traps, they certainly aren’t. Iceland has a lot of loose ash, fine sand, and gravel that can easily damage a car.

What Iceland doesn’t have a lot of, however, is car theft. As one of the world’s safest countries, Iceland has a low crime rate, and the chances that your entire vehicle will be stolen are minimal. Though not common, it is more likely that items would be stolen from inside your car. However, Car Theft Insurance doesn’t cover that.

3. Currency Exchange Fees at Keflavik Airport

people, saving, cash, withdrawal and finance concept - customer hands with money at bank office or currency exchanger
Exchanging money

When exchanging currencies in Iceland, many currency exchange booths charge high commissions or fees for the exchange rates. This is especially true at Keflavík International Airport. However, you could also withdraw money from ATMs, which are available all over the country and open 24/7.

However, debit and credit cards are generally accepted more widely in Iceland than cash. Many credit cards offer a more favourable exchange rate than ATMs or currency exchange offices. In addition, many credit cards offer rewards programs and other perks, such as travel insurance, which can be a great way to save money on your trip. Just check with your bank or card provider first to avoid any unexpected fees.

4. Doing Grocery Shopping at 10-11 Shops

1011 Shop sign near Hlemmur Square, Reykjavík, Iceland
Near Hlemmur Square, Reykjavík

Do not do your grocery shopping in 10-11! With their bright green logo, you can find these shops all over Reykjavík City and at Keflavik Airport. They are the most expensive option when it comes to food shopping. The shops are open 24/7 and are great for a midnight snack. However, your food costs will skyrocket if you pick up a shopping cart.

5. Buying Beer in Grocery Shops

close up of beer or cider cans at liquor store
Don’t get the beer in grocery shops in Iceland

While grocery shopping (preferably not in 10-11), you might see beers on the shelves. Before you grab them and put them in your cart, look at the alcohol content. It’ll likely be 2% or even 0%.

You can’t get alcoholic beverages in grocery shops in Iceland, so if you want to avoid purchasing a drink that won’t give you a buzz, leave the cans of beer at the grocery store alone. For your alcoholic intake, visit one of the Vínbúðin state-run liquor stores found in every major town in the country. However, to save even more money, purchase your alcohol in the Duty-Free shop at Keflavík International Airport.

The Best Free Things to Do in Iceland

Man behind Seljalandsfoss Waterfall, South Iceland, Iceland
Seljalandsfoss Waterfall in South Iceland

Iceland is a great destination for budget travellers, as there are plenty of things to do and see without breaking the bank. If you’re looking for some popular destinations to explore while in Iceland, here are some of our favourites:

Walking Tours in Reykjavik City

Hallgrimskirkja Church in Reykjavik
Hallgrímskirkja Church

If you want to explore the City Center, a walking tour is a great way to do it for free. Several tour companies offer guided walking tours covering the capital city’s highlights, from its unique architecture to its many museums and galleries.

Though the tours are free, donations are greatly appreciated.

Visiting Geothermal Hot Springs

A woman relaxing in geothermal waters in Iceland
Relaxing at Reykjadalur Valley

Though the Blue Lagoon is an amazing stop, there are much cheaper options if you want to soak in geothermal waters. First, of course, there are the local community pools which are found in every major town and village in the country. However, those are not free (but they are cheap!).

However, visiting Nauthólsvík Beach in Reykjavík or one of the natural hot springs found around Iceland is free. My favourites are Reykjadalur Valley in Southwest Iceland, Hellulaug in the Westfjords, and Landmannalaugar in the Highlands.

Sightseeing

Gullfoss waterfall lookout in the golden circle of south of Iceland
Gullfoss Waterfall

Iceland is a beautiful country, and visiting some of the most famous attractions is completely free. For example, visiting the stunning Gullfoss Waterfall on the Golden Circle will cost you nothing. Neither will travel along the South Coast, seeing the natural beauty of black sand beaches and amazing waterfalls.

However, some attractions might charge a parking fee, such as at Thingvellir National Park. Still, the majority of Iceland’s sights are entirely free. You could even create an Iceland itinerary to skip the locations with a fee (although I recommend you don’t since they’re gorgeous).

Iceland Budget Summary

Pink and blue skies at sunset over Aldeyjarfoss in the Icelandic Highlands
Sunset at Aldeyjarfoss Waterfall

A rough estimate of how much the daily budget is for an average trip to Iceland in 2023 would be around $150-$300 per person, depending on your travel style and preferences. This budget would cover the cost of a mid-range hotel, transportation, food, and some activities.

If you are travelling on a budget, you can save money by staying at budget accommodations, cooking your meals instead of dining out, and renting a smaller car. On the other hand, if you prefer more luxurious accommodations and activities, you may need to budget more than $300 USD per day.

Green northern lights mirroring in a lake in Iceland with snow-covered mountains in the background.
Northern lights over Kleifarvatn Lake.

It is also worth noting that the cost of visiting Iceland can vary greatly depending on the time of year you plan to visit. The high season, the summer months June-August, is the most expensive time to visit due to the increased demand for accommodations and activities. Low season, from November to March, can be more affordable, but you must budget for winter gear and the shorter daylight hours.

Using a travel agent can save you time, money, and hassle. They handle everything, saving you days or weeks of research and planning. They can also get you exclusive deals and discounts, giving you peace of mind knowing everything is taken care of.

Overall, budgeting for a trip to Iceland doesn’t have to be complicated. There are plenty of things to do and see without breaking the bank, so don’t let money stop you from having an incredible adventure!

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