Money in Iceland: A practical guide for travellers
When planning a trip to Iceland, knowing how to handle money is just as important as planning your route to the waterfalls or capturing the perfect puffin photo. While Iceland’s landscapes might take you back in time, its payment systems are thoroughly modern. Here’s what you need to know about using currency in Iceland to ensure an easy adventure
What currency is used in Iceland?
Iceland uses the Icelandic króna (ISK) or Íslenska krónan, and while it might feel unfamiliar at first, especially with coins and notes in denominations you aren’t used to, the reality is that you may barely handle cash during your entire trip.
The symbol for the currency in Iceland is Kr which you will see against prices in shops.
Iceland Coins and Notes
There are banknotes to the value of 500, 1000, 2000, 5000, and 10000 ISK and coins worth 1, 5, 10, 50 and 100 krona. The colourful designs feature Icelandic historical figures, adding a touch of local culture to your wallet!
Can I use Euros or US dollars in Iceland?
While some tourist areas in Iceland may accept euros (or other common currencies), it’s not common practice, and change will be given in Icelandic króna. It’s best to use Icelandic króna (ISK) or a credit card.
Do You Need Cash in Iceland?
In most countries, you expect to have cash on hand for taxis, small shops, or tipping, but in Iceland, things are different. Credit and debit cards are accepted just about everywhere, even for a quick coffee or entry for using a public toilet. The biggest exception is the buses, where you will need to pay with cash or the klappid app
If you’re visiting from a place where card payments still aren’t universal, this may come as a surprise. Icelanders don’t carry cash often, and neither will you.
That said, a few remote areas may not always accept cards, so having a small amount of cash tucked away for peace of mind is never a bad idea. ATMs are easy to find in cities like Reykjavik and Akureyri, should you need to withdraw cash.
Paying by Card: What to Expect
Iceland is a card-friendly country, but one detail that can trip you up is the need for a PIN for credit card transactions. Whether paying at a fuel station, buying groceries, or booking a last-minute whale-watching tour, you’ll be asked to enter a PIN. Make sure you confirm this with your bank before you leave, especially if you’re used to signing for card payments.
All major cards, including Visa and MasterCard, are accepted, making it convenient for international visitors. The occasional transaction might require a signature.
Check with your bank if they will charge for overseas payments. In the UK, Monzo will not charge you for any payments overseas; other banks charge a percentage of your payment, which can soon add up.
Where to Exchange Currency
If you do need Icelandic króna, you can exchange money before arriving, but there’s usually no need to seek out currency exchange booths at the airport. These tend to have worse rates than local ATMs. Simply withdrawing cash after you land often gives you the best exchange rate and it’s hassle-free.
Keeping Track of Exchange Rates
Icelandic króna might fluctuate against the major global currencies, so it’s a good idea to check the exchange rate before you travel. Use an app or currency converter to stay updated on what your home currency will get you in Iceland.
When you pay using a card machine, it will ask if you want to pay in your home currency or Icelandic Króna. Always select KRÓNA or reject the exchange rate offered – this will ensure you get the best exchange rate from your card.
VAT Refund for Tourists
If you’re shopping in Iceland, you can take advantage of tax-free shopping on purchases over 6,000 ISK. This applies to goods like clothing, souvenirs, and other non-perishable items, but it doesn’t include food or drinks. Ask for a tax-free receipt at the time of purchase to qualify.
When you’re ready to head home, simply locate the tax-free refund desk at the airport and give them your receipts. There can often be a queue, so factor this into your airport arrival time. It can take some time for your refund to come back, so submit and forget about it.
At present, VAT in Iceland is around 25% for most goods, with a reduced rate of 7% for certain items like books and accommodation, making the refund process a nice perk!
No Bargaining
Unlike in some parts of the world, bargaining isn’t part of Icelandic culture. Whether you’re buying from a farmer’s market or booking an excursion, the price you see is the price you’ll pay. Icelanders value fairness in their pricing, so it’s best to embrace that mindset as you travel.
Tipping in Iceland
When it comes to tipping in Iceland, things are refreshingly simple. Unlike in many other countries where tipping can sometimes feel obligatory or even stressful, Iceland’s culture doesn’t emphasise tipping at all. Most restaurants, bars, and service establishments include service charges in their prices, meaning you’re never expected to leave a tip. Some may have a tip jar by the tills for you to drop some change into when you pay if you want to leave a tip.
For other services like taxis, guides on tours, or in hotels, tipping is rare and certainly not expected. Icelanders pride themselves on providing excellent service as part of the price you pay, so while tipping isn’t frowned upon, it’s more of an occasional gesture than a requirement and is always appreciated.
Currency Made Easy
Iceland is one of the easiest countries to travel without needing to handle cash. With card payments accepted almost everywhere, the króna will likely feel more like a digital convenience than a physical currency. Still, understanding how to handle your finances in a new country is important. With a little preparation, you’ll be ready to enjoy Iceland’s epic scenery without worrying about your wallet.
Complete Guide to
ICELAND
Read all about Iceland, places to visit and the unique wildlife you may encounter
