Iceland On A Budget: 10 Saving Tips When Traveling Iceland

Iceland is notorious for being a pricey travel destination. However, if you plan ahead and make careful spending choices, you can enjoy your trip without breaking the bank. Read on for 10 travel tips and hacks to save you money on your upcoming Icelandic adventure. These tips will truly allow you to visit Iceland on a budget.

Book Flights Well in Advance (and Look into Layovers)

Almost invariably, flights will be cheaper if you book them weeks or even months in advance. Make sure you look at pricing for different days of the week on both your outgoing and returning flights. Flight prices can vary widely from day to day. Both WOW Air and Icelandair offer reasonably priced direct flights between major cities and Reykjavik.

iceland on a budget
Iceland from the air, via the window seat of an Icelandair flight.

You can also investigate the possibility of making your time in Iceland part of a layover. Because of the earth’s curvature, the shortest distance between North America and Europe happens to pass directly over Reykjavik.

Some airlines offer flights from North America to Europe. These include a multi-day layover in Iceland. They can often be cheaper than a direct flight that ends in Reykjavik. As a bonus, you’ll get the chance to extend your vacation at a second European destination.

Rent a Car (and Choose Wisely)

Are you planning to leave Reykjavik at all during your stay? If so, renting a car is the most economical way to get around Iceland. Taxis are outrageously expensive, with even short distances quickly running up a $20 to $30 tab. However, be sure to research different car rental companies ahead of time. Prices and selection can vary widely.

The website is an excellent place to comparison-shop, providing data from all the rental companies available in Iceland and the occasional special offer. For more on this, please visit 13 Iceland Car Rental Tips.

Unfortunate name aside, SADcars is one of the most affordable rental options in Iceland. They offer slightly older vehicle models that are still in perfectly good driving condition. Because their cars are a bit older than other rental companies’, SADcars is relatively forgiving when it comes to any minor nicks or dings you might pick up during your stay, so you can skip the optional gravel and windshield protection and save on your total costs.

Theft insurance, while offered by most rental companies, is also virtually unnecessary. Are you considering any other insurance add-ons? If so, be sure to check first with your personal auto insurance company as well as your credit card company to see what, if anything, may already be covered.

If possible, plan to rent a manual-transmission vehicle. They’re not only more readily available, but they’re also cheaper to rent and drive than automatic cars. If you can’t or won’t drive a stick shift, be sure to reserve your automatic rental well in advance. Supplies of automatic vehicles in Iceland are limited. During the winter months, you may want to consider renting a car or Jeep with four-wheel drive to help you navigate icy roads and bad weather.

Go camping for true Iceland on a budget

Staying in a hotel in Iceland can run up your trip’s costs very quickly. One of our favorite hotels on our entire trip was the Icelandair Hotel Vik. This hotel was relatively pricey even in the off-season. As was the Fosshotel Vatnajokull.

Even the more modest dorm-style guest houses available in some locations can be unexpectedly pricey. If you’re up for a little adventure, renting a camper van is the perfect option for Iceland on a budget. This can help you combine your transportation and lodging costs. It is an excellent way to stay close to Iceland’s breathtaking natural resources.

There are hundreds of campsites located across the country, which gives you added flexibility in your travel schedule. These sites provide a safe location to park your campervan, along with bathrooms and sometimes hot showers and cooking facilities. Some campsites are free. Others charge a modest fee of $8 to $20 per night depending on available amenities.

Iceland has close to a dozen well-regarded camper van rental companies, including SADcars and the family-owned Happy Campers. Most camper vans sleep two to five adults and come equipped with a gas stove, sink with running water, dishes and cookware, cooler or small refrigerator, linens and heating system. Before you drive off in your temporary home on wheels, be sure you know what’s included in your rental. Additionally, check what kind of roadside assistance the company offers.

For more information about camper vans, please see our post Hitting the Road in the Land of Fire and Ice: Five Reasons to Rent a Camper Van in Iceland.

Plan Your Route in Advance

Gas is far more expensive in Iceland than it is in North America. On average, gas in Iceland is about $7 to $8 per gallon. For this reason, you’ll want to be smart about your route and avoid any unnecessary backtracking. Prices peak during the summer months, so be sure to factor the cost of fuel into your total travel budget.

On a related note, it’s a good idea to fill up your tank anytime you see a fuel station. They tend to be somewhat sparsely located in some of the country’s more remote locations. Having to summon roadside rescue because you ran out of gas is very much avoidable.

Buy Groceries and Cook for Yourself

It’s natural to want to enjoy a few special meals at restaurants while you’re on vacation, but eating breakfast, lunch and dinner out can end up costing you an arm and a leg. Especially if you’re traveling in a camper van, you can easily prepare at least half of your meals yourself and save your funds for other parts of your trip.

However, not all Icelandic grocery stores are created equal. Avoid the green logo of 10-11 stores, which are widely considered the most expensive supermarket in the country. You’re much better off sticking to discount grocers like Bónus, with nearly three dozen locations around the island, and the slightly smaller chain Kronan, which offers a respectable inventory of organic and preservative-free goods.

Breakfast is probably the easiest and cheapest meal to prepare yourself.

  • Stock up on inexpensive staples like muesli, oatmeal, skyr and fruit for a hearty start to your day.
  • For lunch or dinner, try canned corn and beans, cups of dried soup or noodles, couscous and canned tuna or salmon.
  • For snacks, trail mix and granola or energy bars are the cheapest, most portable choices.

If you’re able to pack any of these items in your luggage and avoid having to buy them in Iceland, you’ll save additional dollars as well.

Whatever you do, never buy bottled water in Iceland. The quality of the local tap water is incredible. Not to mention it’s the same water being bottled and sold at inflated prices. Bring a reusable bottle and fill it up at restaurants, gas stations and campgrounds. You’ll save money while being gentle to the environment.

Make Lunch Your Splurge Meal

When you do choose to enjoy a restaurant meal, try to plan it for lunch instead of dinner to take advantage of lower midday prices. You may also want to consider sharing a main entrée to further reduce costs. An average restaurant meal for two can easily run $50 to $75 in Iceland.

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Buy Your Booze at the Duty-Free Shops

Alcohol in Iceland is taxed heavily, so just a few drinks at the local pub can make your total trip costs skyrocket. Instead, stock up at the airport’s duty-free shops when you arrive in country. Or, even consider bringing your own libations.

iceland breweries

The Keflavik Airport in Reykjavik allows travelers to pack one liter of spirits and either one liter of wine or six liters of beer in their checked bags. In contrast, a bottle of vodka that sells for $20 in the United States can command as much as $65 in an Icelandic liquor store!

If you do plan to enjoy a beverage while out on the town, be ready to pay $10-12 for a pint of beer or a glass of wine, with cocktails carrying an even higher price tag. Try to time your sipping during restaurants’ happy hours. This may begin as early as 3 p.m. and run until 8 p.m. It will also include substantial discounts on wine and beer. We have a great guide to the Best Iceland Breweries right here on Iceland in 8 Days.

For more information on this, please visit The Complete Guide to Iceland Flights and Airports 2018.

Be Selective When Choosing Activities

Some of Iceland’s most famous attractions are also the most expensive, and not every traveler considers them worth the price. For example, the geothermally-heated waters of the renowned Blue Lagoon will cost you a minimum of $60 to enter. Also, a visit to the spa will set you back even more money.

iceland hot springs

While some online reviewers described a majestic, once-in-a-lifetime experience, others lamented the crowds and high prices and concluded that it didn’t live up to the hype. For a similar, less expensive experience, plan a visit to the Myvatn Nature Baths. There is also the Secret Lagoon hot springs or the Landmannalaugar hot springs. All of these offer the same relaxation at about half the price.

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However, most of Iceland’s stunning natural attractions are free to visit—all you have to do is drive up to them to witness the thundering waters of the country’s waterfalls or stroll along the edge of an ice lagoon. Most paid tours can be easily replicated on your own, so save your money for a truly unique experience that you can’t do on your own, such as a whale-watching tour or glacier hike.

Be a Smart Souvenir Shopper

Like most major cities in Europe, Reykjavik is peppered with souvenir shops, most of which sell the same generic items at high prices. To find higher-quality products that more accurately reflect the country’s culture, you’ll need to search outside the main shopping district in the capital city.

If you’re looking for a specific item like Icelandic wool, check out the Handknitting Association of Iceland. While their handcrafted sweaters, blankets, hats and scarves may cost a pretty penny, they’re also designed to last, and you’re making your purchase directly from the artisans who made them.

The shops in smaller towns also offer handmade products like wool apparel and accessories and jewelry made from the country’s abundant supply of volcanic rock. Not only are these gifts more authentic, but they’ll be cherished far longer than a shot glass painted with the Icelandic flag or a snow globe with a plastic puffin inside.

If you’ve spent more than $50 on mementos, be sure to request visitor tax forms so you can get a refund of your value added tax (VAT) before you head home. As a nonresident, you’re exempt from the country’s substantial sales taxes, but you’ll need to fill out the appropriate paperwork and turn them in at the airport to get your money back.

Keep all receipts and be ready to show your wares at the airport upon request; for this minor hassle, you can recoup as much as 15 percent of the money you spent on souvenirs and gifts.

Visit During the Off Season

If you don’t mind a bit of cold weather, nearly everything in Iceland costs less in the winter than it does in the summer. Rental car and camper van rates are roughly half the price during the low season versus the busy summer season, and the campers’ heaters do an admirable job of keeping you toasty warm.

iceland in december

As an added benefit, you’re also far more likely to see the famous Northern Lights during the fall and winter months (September through March) when the hours of darkness are at their peak.

We have a long guide about visiting Iceland in December here on Iceland in 8 Days.

Bonus: Download this App

The smartphone app Be Iceland is an invaluable resource to help you make the most of your Iceland vacation while sticking to your budget. The app helps you locate and price nearby accommodations, rentals, restaurants and attractions, and it maps basically any need that could possibly arise during your stay, including police stations, pharmacies, ATMs and more. It’s a must-have accessory for any trip to Iceland.


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