6 Ways to Save Money While Traveling in Iceland

If you’re thinking of traveling to Iceland, here are some helpful tips that can save you some money.


Since returning from my recent trip to Iceland, I’ve had a number of people tell me they’re planning to go there and asking for travel advice. I figured since I keep getting asked, I’ll write a few blog posts addressing some of the biggest questions. Here is the first in a series of Iceland-related posts that will be up on the blog over the next couple weeks.

A big concern I’ve heard from potential Iceland travelers is cost. The country isn’t too expensive to get to, but once you’re there, it can get pricey. The food, activities, accommodations, stores…it all adds up. Before you know it, you’ve drained your whole travel fund and then some, which leaves very little for any future travels or last minute trip changes.

That being said, there are some ways to save money while traveling in Iceland. Don’t get me wrong, you will still have to shell out some cash here and there, but if you follow some of these tips, they will definitely give your wallet a little bit of a break.

Seek Alternate Accommodations

There are a small number of reasonably priced hotels in Iceland. The rates at most of them are incredibly high. We managed to find one our first night that wasn’t too bad, but we only stayed one night, and that was plenty.

Tents set up near Skogafoss Waterfall

The cheapest accommodations are the ones you create for yourself. Camping is the most economical way to travel around Iceland, and there are a number of spots to pitch your tent for the night. If you decide to camp, be sure to plan ahead with your route, and research the different camping areas where you can stay. Contrary to popular belief, you cannot camp wherever you like. Technically, there aren’t any laws forbidding someone to camp outside designated areas, but the country does encourage people to use campsites that have been created. This is to protect the delicate land and environment of the island, as well as respect the people that live there.Obviously summer is the best time to camp, but there are some people who choose to do it in the dead of winter. Just be prepared for frigid temperatures and snow, along with few hours of sunlight.

If you like the idea of camping, but don’t want to deal with the elements, you can rent a camper van. The great thing about going this route is that it covers your accommodations and your transportation all at once. Some of these can be rented for as little as 89 euro/day (about $95), which is much cheaper than most hotel rates. Even if you’re traveling with a group of friends or family, there is usually a van that can accommodate. Here are just a few of the companies you can rent from: Campervan Iceland, Go Campers, KuKu Campers, and Happy Campers. Just like with camping, be sure to research where you can park and stay for the evening.

Photo Credit: Campervan Iceland

Camping or camper vans aren’t for everyone. If you prefer more traditional accommodations, but don’t want to pay the hotel prices, airbnb is the next best bet. This is the route we went, and it was one of the best decisions we made. We had the chance to stay in local homes, live within walking distance of stores and eateries, experienced the Icelandic lifestyle (to some degree) and saved a little money on food and accommodations. Airbnb is not the cheapest housing option, but there are other benefits included such as a kitchen and laundry services that can cut down on other expenses. Which leads me to my next point…

Our Airbnb in Reykjavik


Don’t Eat Out

Well, at least not for every meal. As someone who appreciates how much local cuisine plays a role in the culture of a country, I understand that food is an important part of the travel experience. However, when meals can run as much as $75 for two people, you might want to rethink how often you dine out.

There are ways to cut down on food expenses. If you’re staying in an airbnb or some other home rental, you can cook meals there. We went to the local grocery store and bought some instant coffee and milk, as well as some small snacks. We avoided going to pricey coffee shops every morning, and instead got our caffeine fix before heading out for the day.

Making some breakfast

We also packed some granola bars and instant oatmeal, again allowing us to save some money on breakfast. These snacks were also great to have on the road as we drove from town to town. There are rest stops along the Ring Road, but they don’t have the most reasonably priced items, so just be careful about what you buy.

Grocery stores also have pre-made sandwiches and salads that are much more affordable than if you went to a restaurant. You can pick up a couple of these, and enjoy them outside on the beach or near the waterfalls. It makes for a nice picnic.

Now, I’m not saying you shouldn’t eat out at all, quite the contrary. In fact, we had one nice meal every day during our week long trip. This allowed us to enjoy the great Icelandic food, without completely breaking the bank. There were times where we shared a main entree to cut down on cost, or tried a couple small items rather than one large meal each.

Keep Alcohol to a Minimum

Buying a drink at a bar or restaurant in Iceland is very expensive. The locals understand this, and tend to pregame at home before going out so as to limit how much they buy at the bars. There are a limited number of Vinbudins, or liquor stores, around, and they have specific hours of operation. Most cities have at least one and if you do come across one, stock up on some beer, wine or hard alcohol and enjoy drinks at your campsite, in your camper van or at your airbnb.

We usually limited our drinks to one each when we went out. However, one night I was feeling a little overzealous, and decided to try a flight of beer. Considering that flights in the U.S. usually cost about $10-$15, I figured it would be about the same in Iceland. I was wrong. The flight cost more than my meal and my husband’s meal combined. Even if you want to try a few of Iceland’s beers (which I do recommend doing), don’t try them all at once.

The best place to purchase alcohol is at the airport when you first arrive. There is a duty free store right next to baggage claim, and you can grab a few bottles of local beer, or some of the Icelandic liquor Brennivín. Wine is more expensive because it’s not made in Iceland and must be imported. However, you can find some reasonably priced bottles here and there.

Research the Best Transportation

The biggest problem with Iceland is that there aren’t many transportation options outside of a car. There are no trains, and buses are limited and are usually relegated to the major cities. There are bus tours that take you around the island,  but you’re limited by their schedules and don’t have the freedom to explore what you want and when you want.

Our Iceland ride

The best way to get around is with a car. I know renting a car sounds like it would be expensive, but there are ways to find a more reasonably priced rental, and cut down on the costs.

  1. Travel with others: If you’re traveling with two or more people, you’ve already saved money on a car. Splitting the cost 50/50 or three ways will certainly cut down on the daily expense of a car. Also, you can split the cost of gas, another expense to consider when traveling.
  2. Choose a stick shift: Go with a manual car and you’ll save money. Automatics are more expensive. This obviously isn’t an option if you don’t know how to drive a manual, but if you do, you’re in luck.
  3. Choose your vehicle wisely: If you don’t plan on going off road, you don’t need the added expense of an SUV. A standard or compact car with good tires is all you really need to handle the roads of Iceland.

Hitchhiking is an option, but you’re relying on the kindness of others and hoping that people have the space in their cars. You also have to think about how often people drive by. There were times when we were the only car on the road for miles. Don’t count this out completely, because it is a feasible option. There are just downsides to consider.

As I mentioned before, camper vans are a nice alternative to renting a car, because you’re combining your accommodation and transportation costs into one.

Be Selective with Activities

Iceland has a number of free attractions. Waterfalls cost nothing to visit. Same with the beaches, lava fields, geysers, etc. You can pretty much see everything worth seeing for little or no cost. However, if you want to experience more of what this country is made of, you have to pay. Glacier tours, cave tours, whale watching, volcano exploration – they all cost money. Rather than avoid these all together, I recommend being incredibly selective about what you want to do. If you’re going to regret leaving Iceland without doing (fill in the blank), then plan ahead for that expense and be sure to do it.

We knew we wanted to visit the Blue Lagoon. I know it’s touristy, but it was something we felt we had to do. The great thing about the Blue Lagoon is that prices vary on the time of day you choose to go. Early morning and late evening times are much cheaper than mid-day, high traffic times. If you’re okay with going at 8am, you can save a few bucks. There are a variety of packages to pick from, too. If you don’t want to get a drink from the swim up bar, then don’t get that package. Go for the most basic. You’ll still experience the Blue Lagoon, same as everyone else.

If you’re interested in the hot springs, but don’t want to go to the Blue Lagoon, there are free natural springs all over the island. They take a little more effort to reach, but if you’re looking for an adventure, it’s worth it. Be prepared, as some require a 4×4 to reach, or are located on private land. You’ll need to research these before you go, as some can be difficult to locate, and using data to map it on your phone is not always an option.

Be a Savvy Shopper

Like any major European City, Reykjavik has a number of souvenir shops, and most carry the same items at some high prices. If you want authentic, well-made and often times more affordable souvenirs, look somewhere other than the main shopping stretch.reykjavic-9

One of the most commonly sought after items is Icelandic wool. In Reykjavik, probably the best place to buy a wool sweater is The Handknitting Association of Iceland. Here, you can pick from a large selection of sweaters, blankets, hats and more, buying direct from the people who made them. They are still a bit pricey, but far less expensive than what you might find in the tourist areas. Also, it’s worth the money when you’re getting high quality clothes made by the locals.

Many smaller towns offer authentic wool items, as well as other great Iceland gifts like volcanic rock jewelry. If you take the time to search, you’ll have better luck finding the good items at a cheaper price.

I think it goes without saying that you should avoid buying the small cheesy souvenirs. How many shot glasses does one person really need? Go for the items that are actually worth the money, that really showcase the culture of Iceland. The person you’re shopping for will appreciate those kinds of gifts much more than a puffin snow globe with an Iceland flag on it.

Finally, when you purchase your items and you’re paying more than 6,000ISK, be sure to ask for the tourist tax forms so you can get your valued added tax (VAT) refunded before you leave the country. Basically, all items you buy are taxed, but as a non-resident of Iceland, you don’t have to pay that sales tax if your purchase is over a certain amount. Since the tax can’t be taken out at the time of transaction (don’t ask me why), you will need to fill out a tax free form and turn it in at the airport to receive your refund. This can get you roughly 15% back on your purchases, which can be a significant amount. If you don’t get these tax refund forms, you’re leaving money on the table. Be sure to keep all your receipts, as these are needed when you fill out the forms, and be prepared to display your items at the airport if asked.

If you’ve visited Iceland, what are some ways you saved money? Any other tips and tricks? Please share in the comments.

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4 comments on “6 Ways to Save Money While Traveling in Iceland”

  1. Absolutely agree with cooking your own food when you can. Also a photo-op with some Icelandic horses along the road is free and certainly a must!

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