There are some destinations that linger at the top of a bucket list, but we can’t quite bring ourselves to book. For a long time that’s been our relationship with Iceland, in part because it can be incredibly difficult to plan a trip to Iceland on a budget. Between accommodations, cars, flights and food every part of a trip has the potential to be a budget buster!
Now that our kids are getting older and we’re trying to squeeze in more trips while we still get to schedule them, it’s finally time. We have Iceland booked for this coming summer so I’ve asked Igor of Epic Iceland to give us his best tips for budget travel in Iceland. Igor has spent months in Iceland and keeps coming back. His favorite activities in Iceland include hiking in the remote highlands and driving the rough Icelandic F-roads, so he’s explored many corners of the country without spending a fortune.
Iceland is a small island in the middle of the Atlantic Ocean with unpredictable weather, cold winters and a short growing season. That means some things can be more expensive in the “Land of Fire and Ice” than you’ll find at home, often because they have to be imported.
Prices in Iceland can be amongst the highest anywhere in the world, ranking in the top five on the global cost-of-living index every year. But don’t worry, there are lots of ways to save money when visiting Iceland!
Here are our 20 top tips for budget travel in Iceland – these are easy to follow and cover your trip from the minute you start booking to savings once you’re in the country.
How to visit Iceland on a budget: save on early planning
1. Research how to get cheap flights to Iceland
The great news is that there are many ways to get to Iceland on a budget these days, and they don’t necessarily involve crazy itineraries. Discounter PLAY Airlines will fly you non-stop to Iceland for as little as $350 even in the summer! They offer flights from Baltimore, Boston, New York, Toronto and DC as of this writing.
If you’d rather fly for free, there are some great ways to get to Iceland using points and miles! First, you’ll want to research award tickets through KLM Flying Blue and Avianca Lifemiles to see if one of them has itineraries from your home airport. Second, you’ll open one of these travel credit cards to earn points that will fund your ticket:
- Chase Sapphire Reserve or Preferred – use for KLM
- Capital One Venture X – use for KLM or Avianca
- Any Amex Membership Rewards card – use for KLM or Avianca
Flying to Iceland on points requires plenty of advance planning, but even with six months it should be achievable.
2. Book your accommodations well in advance
Iceland doesn’t have enough places to stay for all of the people who want to come visit during the peak summer season, so it’s really important that you book hotels and guest houses early. Since everyone is trying to save money in Iceland, the budget-friendly places to stay get snapped up first.
Fortunately you can book most accommodations on Expedia with generous cancellation policies. You’ll also find lots of great options on Booking.com but be sure to compare prices including taxes on both sites to make sure you’re getting the best deal.
Iceland doesn’t have a lot of option for booking on hotel points sadly, and most of the options are in and around Reykjavik. There you’ll find several hotels that are part Hilton and Marriott groups, while Marriott also has one amazing option near the Golden Circle. If you want to book one of these hotels, look into the hotel-branded credit cards from American Express to find your perfect match.
Grocery shops in Iceland have shorter opening hours than you might be used to at home – 10 am to 8 pm, for example. The 10 to 11 shops will be pricey!
3. Rent a proper car
Choosing a proper car for Iceland is one of the most important things you need to sort out when planning your trip. Car is the most convenient way of transport in Iceland.
But it’s important to rent a car that meets the needs for your trip. If you plan on traveling off the main roads, be sure to rent with a company that has more liberal policies. Likewise many rental cars in Iceland do not have air conditioning – if that matters to you, pay attention when you rent. Also be mindful of how much trunk space rental cars have, especially if you’re visiting Iceland with kids or a group.
Manual transmission cars are still very common in Iceland and much less expensive for rentals. But if you aren’t already comfortable driving one, it’s better to spend the money on an automatic to avoid any issues or stress.
It’s best to book a car in advance and to make sure you have proper insurance coverage. Any damage to the car may be very costly in Iceland. If you’re using a Chase Sapphire card to pay for the entire rental, decline all additional coverage from the rental company to make use of the Sapphire’s excellent primary rental car insurance.
Renting a car will not only save you time. It will also save you from expensive taxis and group tours and give you full freedom to explore all the places you want and whenever you desire!
Be sure to compare prices to find the best deal on an Iceland rental car:
4. Get travel insurance
Iceland is a wild and exciting country, where Mother Nature is firmly in charge. Weather conditions can change in seconds, so you must be prepared for all eventualities.
Make sure that you have adequate health, vehicle and accident insurance to cover you if something goes wrong.
And always hold onto the door when you get out of the car – the wind can be wild! If you aren’t careful when you pull in next to another car, you could end up dinging their door and be liable for damage (potentially to both cars).
Getting ready to travel Iceland on a budget
5. Use coupon codes
You don’t have to buy everything for a full price in Iceland! You can often find a lot of useful deals that will save you a buck or two.
For example, Epic Iceland aggregates the Icelandic discount codes on many local car rental and guided tour companies.
There’s also the Visitor’s Guide of Iceland that offers promo codes for many museums and restaurants.
6. Pack appropriately
There’s an Icelandic saying: “There’s no such thing as bad weather, only bad clothes!”
You don’t want to spend your money on emergency clothing while on your trip (or waste your limited time in Iceland), so make sure that you pack appropriately before you arrive. That includes everything from lightweight base layers to waterproof outer layers!
How to save money on food in Iceland
7. Take advantage of duty-free alcohol when you arrive
If you like a tipple, make sure that you visit the sizable duty-free store at the airport, just after you pass the “Exit to Iceland” sign.
This is your best chance to stock up in advance and save some money on alcohol.
Beer and spirits are much cheaper here than in the official Vínbúðin outlets around the country, which have specific opening hours (not open on Sundays).
Your personal allowance at the airport is a maximum of six units, equivalent to three liters of beer or six bottles of wine.
8. Shop like a local
Bónus offers the cheapest prices in Iceland for groceries, fruit and vegetables, snacks and drinks. Stocking up on picnic provisions if one of the best options if you’re wondering how to travel cheap in Iceland.
There are 33 branches all around the country, with several in the capital. The “little pig” logo is your passport to cheaper food!
There are other shops, including 10 to 11, Hagkaup, Nettó and Krónan, but their prices are usually higher.
Some branches also have shorter hours at the weekend, so don’t rely on buying groceries in the evenings or early mornings – try to shop during the day.
9. Don’t buy bottled water!
Icelanders never buy bottled water. Why would they, when they have crystal-clear water pouring from every tap in the country?
Bring a water bottle and fill up for free wherever you go in Iceland – you’ll never be charged for water here. This insulated water bottle is a great, simple option that will fit well in your hand as well as the side of your backpack.
10. Check out Grapevine’s “Cheap Eats”
As soon as you arrive in the city, look out for a copy of The Reykjavík Grapevine.
This is the city’s excellent listings paper, packed with helpful information, interviews and events.
Most importantly, you’ll find a long list of “Happy Hours” and “Cheap Eats“, telling you where to find the best value meals and drinks in the capital!
Some bars are “Happy” for several hours, so you’ll be spoilt for choice!
Grapevine has a website and a Facebook page as well – check these for more details.
11. Eat out at lunchtime, not dinnertime
Restaurant meals in Iceland can be eye-wateringly expensive, but you don’t want to miss out on the fantastic foodie scene while you’re here.
For the best deals, check out lunchtime offers from restaurants and cafes and fill up on impressive Icelandic cuisine before the sun sets each day.
That’ll cut the costs for eating out in a big way, and you can still grab a light bite later, like the famous hot dogs in the city center.
12. Download Barhopp.is
Did you know that beer was banned in Iceland as recently as 1989?
Don’t worry – Iceland now has one of the most vibrant beer brewing cultures in Europe, so there are lots of great bars to check out in the capital and around the country.
A dedicated app guides you through the options, with Happy Hour listings, special events and more.
Download Barhopp and enjoy the best of Iceland’s booming bar scene while also saving money in the evenings.
13. There’s no need to tip
There’s no need to add a tip for service in Iceland.
It’s not part of the culture, and in general, the people who keep you fed and watered are paid appropriately for their hard work and expertise.
But it’s always appreciated if you want to round up a little for good service.
Budget-friendly Iceland tips for activities and more
14. Go camping in the Highlands
Iceland’s incredible natural landscapes are best enjoyed on a camping trip, and a journey into the untouched Highlands of Iceland is a highlight of any visit to Iceland.
You’ll need the right equipment to enjoy a Highlands camping trip, so it’s good to know that you can rent everything you need from reliable suppliers when you get to Iceland.
If you’re keen on exploring the magical and mysterious Icelandic Highlands, we’ll connect you to camping equipment suppliers for all your needs. Those suppliers know exactly what quality gear you need for a successful experience and you also won’t have to worry about checking (and paying for) your gear with the airline.
15. Take a dip for free (or not very much)
Everyone wants to visit one of Iceland’s famous geothermal spas, like the Blue Lagoon. These are high-end luxury experiences, and well worth seeing.
Icelanders prefer taking a dip in natural hot springs, “hot rivers”, or their local swimming pools, which are all geothermally-heated havens just like the more famous spas.
But these places are either free to enter or cost a fraction of the fee to visit the Blue Lagoon, Sky or Hvammsvík.
There are dozens of natural hot pots in Iceland dotted all over the country where you can bathe like a Viking in peace and solitude, and without a big entrance fee!
16. Don’t Speed!
If you hire a car, make sure you pay attention to your speed. If you’re found driving too fast, the speeding fines are very expensive!
17. Remember to pay for parking
Before leaving your vehicle, check if you need to pay for parking (in the city center areas, or at places of interest). As with speeding, the fines are very expensive if you’re caught not paying.
Make sure that you park in the direction of travel in built-up areas. In more remote areas you’re likely to see cars facing both directions when parked on the side of the road.
18. The internet is free
Iceland is a highly-connected country with free public WiFi everywhere.
Whenever you stop, you’ll find it free and easy to go online, so there’s no need to spend money on data charges or bring a fancy hotspot with you. Just use an app like WhatsApp or Messenger for calls instead of making a regular phone call.
19. Tax refunds on souvenirs
As with everything else, prices for souvenirs are higher than in other countries, so remember to look out for the tax-free shopping signs.
If you buy souvenirs like a lopapeysa woolen jumper or jewellery costing more than 12,000 ISK, you can claim the 14% sales tax back.
You’ll need to fill out a simple form at Keflavík or the Tourist Information Centre in Reykjavík. Make sure that you remember to keep those receipts!
Check the country of origin of any Icelandic woolen clothing before you buy. Some are made overseas to an Icelandic pattern, but these are not the “genuine articles“.
And visit the famous flea market at Kolaportið at the weekend, or browse the Red Cross thrift stores for bargains!
20. Festival fun for free
Icelanders love a party and there’s a full calendar of festivals and national holidays throughout the year.
That means there are lots of free events taking place around the country, and you’re invited to join in as well! It’s the perfect way to plan cheap travel in Iceland that’s meaningful and memorable.
A visit to Iceland is definitely the trip of a lifetime, but hopefully with these insider tips on visiting Iceland on a budget you’ll be able to make the most of your time without breaking the bank!
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