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What currency do Iceland use and how to travel on budget

What currency do Iceland use is probably the most frequently asked question from tourists interested in exploring this magnificent country.

Although a small country, Iceland has its own currency known as the Icelandic krona with the ISK code.

What currency do they use in Iceland

The name of the currency, the krona has the same origin as the other Scandinavian currencies and comes from the Latin word corona which means crown in English.

This currency is used today in Iceland but most probably you won’t see much of it when you visit Iceland as the country used on massive scale debit cards and credit cards as a method of payment.

In use in Iceland is the Icelandic króna and there are banknotes and coins as follows:

  • coins: 1, 5, 10, 50 and 100 krona
  • Banknotes: 500, 1,000, 2,000, 5,000 and 10,000 krona

Still, many restaurants, hotels, and tourist attractions accept Canadian dollars, US dollars, Euros, Norwegian, Swedish, and Danish currency as payment methods.

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Iceland Currency Money What currency do Iceland use

Iceland Currency Money

A short history of the Icelandic krona

1885 was the year when Iceland started to issue their own money, replacing the Danish krone which had been used until then.

In 1918 the country of Iceland gained its autonomy from Denmark and adopted the Icelandic krona as official currency.

The first notes that had been issued were the 5 krona, 10 krona, and 50 krona which today had been transformed into coins.

The first coins appeared 4 years later, in 1922, and were the 10 and 25 aurar ( which is a subunit of the krona like cents for dollars and pennies for GBP).

Later the Icelandic bank issued the 1 krona and the 2 krona and in the following year the 5 krona.

Iceland ATM Money Currency of Iceland EUR ISK

Iceland ATM Money Currency of Iceland EUR ISK

The design of the coins had been changed in 1946 when the Royal Monogram was eliminated as a tribute to the independence earned by the country in 1944.

1967 came with a deep economic crisis, so the krona lost its value and new coins should be issued.

Such a small country like Iceland is influenced by the evolution of the international financial market so the year 1981 came with a new crisis when krona lost its value once again.

The old currency was raised by 100 and new banknotes and coins were issued, the new currency having the actual code ISK.

Currency of Iceland Euro EUR

Currency of Iceland Euro EUR

After this reform new banknotes appeared: the 500 ISK and a couple of years later the 1,000 ISK and the 5,000 ISK.

In 2013 the 10,000 ISK was issued and all the banknotes and coins mentioned above are in use even today.

The Icelandic Central Bank (The Central Bank of Iceland) or Seðlabanki Íslands is in charge of the monetary policy of the country and they issue new banknotes and coins.

Even today the printing of the money in Iceland is not made inside the country, but they use the De la Rue in England.

What currency do Iceland use and tax-free shopping

Iceland is an expensive country, no matter what currency you choose for paying your expenses on your trip to Iceland.

But the Icelandic government thought about everything and came up with a solution for tourists interested in visiting their country.

Reykjavik Iceland ATM Currency Money withdrawal ISK EUR

Reykjavik Iceland ATM Currency Money withdrawal ISK EUR

Here I am talking about tax-free shopping which means that you can get back the VAT paid for products in Iceland.

In order to do that you need to follow some steps if you had purchased goods and services in a value higher than 6,000 ISK VAT.

The steps you have to follow are:

  • When you buy something it is a good idea to ask at the store for a tax-free form together with your original purchase receipt as their signature must be on the form.
  • After you get your tax free receipt to go to Arion Bank in Keflavík International Airport to get a stamp on the papers
  • Once you have your papers stamped go to the International Refund point in Keflavik to get your money back for the VAT paid in Iceland.

There is also a maximum limit for this refund of 100.000 ISK; if you exceed this limit you need to get your forms validated at customs.

Now that you know what kind of currency does Iceland use, it’s time to see how you can visit this magnificent country without spending a lot.

Visiting Iceland without spending a lot

1. Get alcohol from a Duty-Free store

Alcohol is extremely expensive and hard to find in Iceland as it can be sold only in special stores which are located in bigger towns from Iceland and have quite short opening hours.

Iceland Beer reykjavik Restaurant

Iceland Beer reykjavik Restaurant

Right inside Keflavik International Airport, you can find a duty free where you can buy alcohol for your trip but there is an alcohol allowance.

The allowance is 6 units which means that each passenger can buy for example a bottle of wine, a bottle of spirits, and a six-pack of beer.

2. Don’t buy bottled water

I guess it is clear for everybody what currency do Iceland use, but it is less clear why not to buy bottled water.

Well, first of all, it is quite expensive and second of all Iceland has among the best tap waters in the whole world.

Nobody is drinking bottled water around Iceland as the waterfall and the springs are just outside their home.

Iceland reusable water bottle

Iceland reusable water bottle

You can get the free water when you go to the restaurant; all you have to do is to ask for tap water when you order food.

And let me tell you a secret: the bottled water you will find in stores is actually tap water that you can find everywhere in Iceland.

3. Cook your own food as often as you can

Eating out in Iceland is incredibly expensive so do yourself a favor and cook your meals wherever you can.

Most of the guesthouses, hostels, and campsites from Iceland have a kitchen where you can cook and the food at the supermarket is way cheaper than at restaurants.

Healthy Amazingly Tasty Salmon with vegetables in Iceland Food

Healthy Amazingly Tasty Salmon with vegetables in Iceland Food

Go shopping and then come back to your accommodation and cook your meal; you will end up paying half for your cooked meal than if you go to any restaurant.

4. Hunt for Happy Hours

Some of the bars and restaurants from Iceland, especially the ones located in and around Reykjavik offer drinks at discounted rates each day from 3 p.m. to 9 p.m.

The discounted prices are usually for beer and wine, so you have to pay the full price only for food.

Iceland Credit Card Debit Card Money Currency

Iceland Credit Card Debit Card Money Currency

At first, the sight might not seem like an outstanding deal but when you do your math you’ll see that you will reduce your bill significantly as the price for a beer is around 10 euro for a pint.

5. Don’t call for a taxi

Taxis are extremely expensive all around the country, so try to walk or use public transport if you want to keep your money in your pocket.

Just to have an idea about how expensive a taxi is, I want you to know that the cost of a taxi ride from the airport to Reykjavik city center is around 160 USD, for a 35 minutes ride, while the cost of the public transport is around 8 USD.

Or let me give you another example: you will end up paying about 25 USD for a short drive from Central Station to Reykjavik downtown when you can simply walk for about 20 minutes.

6. Book your trip in advance

When talking about Iceland we can hardly talk about last-minute offers and discounted prices if you book your trip minutes before you start your trip.

It is an extremely popular country so the prices will go up quickly and you will end up paying more for car rental, tours, and accommodation if you don’t book well in advance.

Vacation Planner Cover

Vacation Planner Cover

I always plan my trips in advance and you should do it as well to lower your cost of traveling. Here is the travel planner printable I use for planning my trips: Vacation Planner Printable.

Car rental prices, hotel prices, and even tour prices are significantly higher if you want to buy on the spot without prior reservation.

Iceland Travel Guide PDF before you go

Iceland Travel Guide PDF before you go

As I have visited Iceland recently I wrote a comprehensive guide that will help anyone plan their trip, find best accommodation, transportation and not miss any important landmark when planning a trip to Iceland. You can get my Iceland Travel Guide here: 10 days Itinerary in Iceland

Iceland Travel Guide cover A4

Iceland Travel Guide cover A4

7. Use public WiFi

Iceland is a very wild and remote country and big cities like Reykjavik have many places with free public wifi.

There are shops, cafes, hotels, restaurants and bars that offer free wifi for their customers so don’t waste your money for roaming or other fees asked by your telephone operator to talk with your family and friends.

8. Pick less famous natural pools

If you want to go to Blue Lagoon or Myvatn Natural Pool you will definitely end up paying a lot of money for the entrance fee, towels, slippers, and even drinks than if you choose to visit less famous hot springs.

Iceland Natural Bath Summer vs Winter

Iceland Natural Bath Summer vs Winter

Consider paying a visit to Secret Lagoon located on the Golden Circle road for example, rather than going to Blue Lagoon which is not only the most popular but also the most expensive pool in the country.

9. Know your bank’s service charges

Before you leave home go to your bank and ask for the service charges you have when paying abroad.

There are banks and credit cards or debit cards that do not have any commission when used abroad so these are the ones recommended for your trip.

Iceland Credit Card Debit Card Money Currency

Iceland Credit Card Debit Card Money Currency

Bear in mind that cards are widely accepted in Iceland and you can use them almost everywhere so it is crucial to have a 0 commission card with you.

Conclusion

Questions, like What currency do Iceland use or What is the best currency to use in Iceland have just one simple answer: the currency you should use when in Iceland is the local currency that is called Icelandic Krona, code ISK.

But the country is extremely advanced so you will hardly see cash when traveling to this country.

You’d better have a 0 commission card with you as credit and debit card payments are widely accepted all across the country.

FAQ

What is the best currency to take to Iceland?

The best currency to have when traveling to Iceland is the national currency of the country, the Icelandic krona.

Fortunately, you don’t have to take with you a large amount as electronic payments are accepted almost everywhere in the country.

If you plan to stay in big cities and in tourist destinations, you don’t need cash at all.

If you plan to explore the country and venture into the wilderness and more remote areas then you should consider getting some cash with you.

The easiest and cheapest way to get Icelandic krona is by withdrawing cash from any ATM found in Iceland except for EURONET which has high commissions.

How much is 100 US dollars in Iceland?

100 US dollars equals almost 13,000 Icelandic Krona at the current exchange rate, but as the prices are quite high in Iceland there are not many things you can do with this amount.

You can, for example, have 2 meals at a restaurant or pay for a decent room in a good hotel for one night for 100 USD.

How much is 1 US in Iceland?

1 US dollar equals 130 Icelandic kronor, and there is almost nothing you can do with this amount.

A bottle of water is around 4 USD, while a burger is around 25 USD, so be prepared for high prices as this amazing country is one of the most expensive in the world.

Is Iceland expensive?

Iceland is expensive; it was ranked as the most expensive country in Europe and in the top 10 most expensive countries in the whole world.

But trust me that every penny is worth to be spent as this country is one of the most spectacular I have ever seen.

Northern Lights, glaciers, volcanoes, and breathtaking waterfalls are just some of the things that you have to see on your trip to Iceland.

And this is not only my opinion but all people who visit this country fall in love with it and want to come back again and again.

Logistical tips and tricks for your trip

Book your accommodation

We always use Booking.com as they have the best price-quality ratio and they offer a wide range of hotels, guesthouses, apartments, and villas to choose from.

You will find here all types of accommodations, from the cheapest ones to the most luxurious.

Don't forget travel insurance

We never leave home without HeyMondo Insurance or Safety Wings Insurance as they offer the best services and a good value for money, plus COVID coverage.

Travel insurance will always protect you against unexpected events and cost like illness, COVID, injury, theft, or travel cancellation.

We never go on any trip without travel insurance and there were many cases when we had to use it.

Renting a car
We like to explore a country on our own and a car gives us the mobility and freedom to do that.

We always rent our car from Discovercars as they have free cancellation 48 hours prior to starting date and a wide range of car rental companies and options to choose from all over the world.

Tours and attractions
When we are looking for some adventure or we simply want to break up the monotony and discover new places, we always use GetYourGuide.

We love it because we always find the most amazing experiences, with free cancellation and a large variety of activities and tours to choose from.

Airplane tickets and holiday packages
Expedia is our ally when searching for the best price for airplane tickets as it works as an aggregator for a huge number of airlines and we always find the best price for our flights.

Travel tip: use Expedia when you are searching for holiday packages as they have many last-minute offers and great discounts for hotels, flights, and even the whole holiday packages.