As a Yorkshireman, I pride myself on finding a way to cut costs. This guide will give you tested tips on how to best save money on a trip to Iceland. I could just recommend that you just buy a bag of rice from the supermarket, cook it yourself on a beer can stove using the fresh glacial water and live in a tent in the -12 degrees winter weather but this way of travelling isn’t for everybody. If this is how you’re going to travel hats off to you. I’d love to hear about your trip.
This guide will give you cost-saving tips but will also presume that you want to have a comfortable time and see the best that Iceland has to offer. There are countless travel guides telling you what attractions are best to visit and where to go. Many of these guides have invested interests in selling you a tour or excursion.
Why is Iceland so expensive?
Iceland is quickly becoming the destination of choice for tourists all over the world. This popularity and demand are helping to drive the prices high, particularly in the tourist areas. The filming of the Game of Thrones ‘beyond the wall’ scenes has captured the imagination of millions of people from all over the world. With active volcanoes and colossal glaciers, Iceland is the real-life land of ice and fire.
Tourism is one of the main sources of income for the economy. High rates of tax on goods and its relative isolation as an Island nation means that everything is priced at a premium. Prices have improved since the crash of its currency in 2008 but Iceland is certainly not a typical location for a traveller looking for a bargain.
The hype for Iceland is deserved
Iceland is by far the most expensive country I have travelled to. Everything is expensive. The food, drinks, accommodation and many of the main attractions. Here are some tips to follow to keep costs down in Iceland:
Pay for everything on a travel-friendly credit card
Iceland is a predominantly card based paying country. For the first time ever on my travels, I didn’t withdraw any local currency. I paid for everything using my credit card.
I use the Halifax clarity credit card. There are no costs for using this card overseas and I can even withdraw cash from an ATM free of charge at what I have found to be the best exchange rate I can find in the countries I have travelled to.
This link to moneysavingexpert.com gives up to date advice on what is the best credit card to use for travel. It also gives you tips on the best way to spend money when overseas.
Don’t stay in Reykjavik – Explore
This advice could be controversial but if you are keen to travel on a budget I would recommend that you don’t stay in Reykjavik at all. Not even for one night. The Capital of Iceland understandably draws the majority of the tourists and travellers. Reykjavik is very small when compared to other capital cities in Europe. It is also the most expensive place in Iceland. If you’re from the UK, it can be compared to a city about the size of Hull but without the cheap fish and chips.
I stayed in the town of Selfoss. It is about an hour east of Reykjavik and was much cheaper than staying in any hotel in the capital. Your time constraints and the season which you travel will dictate your plan. If it is the summer I would avoid staying in accommodation altogether and camp for the duration of my stay. In the winter I would stay in hostels.
Stay away from the booze
Alcohol is heavily taxed in Iceland. There is so many beautiful and epic sights to see without feeling the need to get wasted in the bars and clubs. Rather than heading to a bar, head to the centre of the country at night in search for the Northern Lights.
If you are set on drinking, my advice is not to pass through the duty-free section of the airport empty-handed. A bottle of vodka in the airport will cost about $25.
Hire a car
This piece of advice would not normally appear in a budget guide to a country but Iceland is different. Without a car, you lack the freedom to explore the free sights. If you take a tour bus, it will likely cost more than hiring a car. I found the best prices to be Reykjavik cars. You can pick up and drop the car off at the airport.
If you are dead set on reducing your costs and not hiring a car, hitch-hiking in Iceland is considered to be a safe alternative. This will reduce your freedom in one way but also make it an interesting adventure.
Drink tap water and bring a flask
The tap water in Iceland is quite possibly the cleanest and purest I have ever seen. Bring a reusable water bottle with you and eliminate the need to pay for drinks. If you like a brew, a flask is invaluable. I’d also recommend that you bring your own stash of Yorkshire tea bags but I am biased.
Stay in a hostel and make use of the communal kitchen
The hostel I stayed in at Selfoss was a higher standard than many budget hotels I’ve stayed in. It was very clean which was helped by the rule that you had to remove your shoes at the front door. If you are a member of Hostel International you receive a 700 krone discount on your stay.
The communal kitchen was invaluable when it came to cooking evening meals and breakfast. It eliminated the need to eat out and will save you a ton of cash. The kitchen area is also a great place to meet other travellers, share travel and itinerary tips and drink any of the duty-free alcohol you may have purchased at the airport.
Rather than visiting the Blue Lagoon visit the Reykjadalur Hot Spring Thermal River
This was quite possibly the greatest day I had in Iceland. The travel guides will tell you that the Blue Lagoon is a MUST-SEE destination and I am sure it is lovely but it’s so damn expensive. I just can’t justify paying 65 pounds to visit a hot bath. Geothermal rivers run throughout the country and one of the best places to bathe for free is only an hour away from the Blue Lagoon and 40 in from Reykjavik. The water at the hot springs varies from almost too hot to enter all the way to mild lukewarm soak. The higher up the river, the hotter it is.
If you enter Reykjadalur Hot Spring into google maps it will direct you to a car park where you start the trek to the hot springs.
The trek is roughly 3km uphill through a mountain valley and takes about 45-60 min to get to. There is a path that leads all the way there and even in the winter, the path is visible. The views on the way there are stunning. As you look south you can see all the way to the coastline.
On route to the river, you will encounter boiling hot springs. These steaming pots of bubbling water are not for bathing and the warning signs tell you that they are over 100 degrees. They are pretty interesting to see.
I visited the thermal river on New Year’s Eve in -12 degrees snow. After an uphill hike in the snow, there was no greater feeling than getting into a thermal bath. Taking your clothes off when it is that cold initially feels counter-intuitive but once you’re in the river it is very much worth it.
Even better was the fact it was completely free.
In the summer, the river can get quite busy but there is plenty of space for people to bathe. If heading there in the winter, I would advise that you wear nano spikes or crampons as many parts of the path are covered in thick ice. Other than a towel, swimming clothes.
Visit the countless epic waterfalls
The length of your stay will determine your itinerary. If you plan to visit for 3 days or 3 weeks, the whole Island has epic waterfalls to visit. My visit to Iceland was only 5 nights so I decided to stay in the South of Iceland. Here were my favourite waterfalls that were all free or a small £2 pound parking fee.
The most famous and possibly the most epic waterfall in Iceland.
In the beautiful Þingvellir National Park. In the winter it freezes up almost completely but is still outstanding. This is a view looking away from the waterfall into the national park.
One of my favourites. You can get super close to this waterfall and as it is off the beaten track there is a chance you will have the whole place to yourself.
Seljalandsfoss and Gljúfrabúi
These two waterfalls are within 600m of each other. In the summer, you are able to walk behind Seljalandsfoss and feel the power of the waterfall. When I visited, this walkway was out of bounds due to the ice. The less visited Gljufrabui is, in my opinion, more epic than the larger Seljalandsfoss. Take wellies or waterproof boots with gaiters and walk through the shallow river to see the waterfall up close. At winter, the frozen ice surrounding the cave is like nothing I have seen before.
Another epic and widely photographed waterfall. Look at what this woman is wearing at -10 degrees. The things people do for social media! There are steps that lead from the bottom of the waterfall to the top which offers another perspective. It’s a pretty busy destination for tourists as you can see in the picture below.
This is the most voluminous waterfall in Iceland. When I visited, there were only two other people there. This waterfall is epic in the winter.
Don’t pay for a guided tour – do it yourself
There are some activities where this does not apply. Horse riding, glacier walks, diving the continental divide at Silfra. If you have the budget to do these activities, go for it. Some of the guided tours offer to do things that you can effectively do yourself such as seeing the Northern Lights, the Golden Circle tour and any other excursions to beaches or waterfalls. This is why having a hire car will save you money in the long run.
The Golden circle is absolutely achievable without a tour. By travelling in your own car, you can beat the crowds to the Geysirs, Gullfoss and Þingvellir National Park.
This guide has only gone into southern Iceland. The country has much to offer, especially in the more remote north of the country.
Your expenses can be split into three categories: accommodation, food and entertainment
Travelling to a budget can be simple if you can keep these three things to a minimum. There is so much free and natural beauty in Iceland. An adventure here does not need to cost a fortune.
If you have any further tips or advice to reduce travel costs in Iceland please leave a comment below.