How to Save Money in One of The World's Most Expensive Travel Destinations: Iceland
- Alanna Gabbett
- Dec 6, 2024
- 9 min read
Updated: Mar 26
Iceland is celebrated for its stunning landscapes, rich culture, and unique experiences. Unfortunately, it is also known for being one of the most expensive travel destinations worldwide. However, with careful planning and savvy strategies, you can discover this beautiful Nordic island without overspending. Below are practical tips to help you save money while enjoying the breathtaking sights and activities of Iceland.
In this guide, we'll explore the best ways you can save money on your next trip to Iceland!
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Dine Out Less
Grocery Shopping is Your Friend
Dining out in Iceland can lead to unexpected costs, with meals often priced at $25 or more. To extend your budget, incorporate grocery shopping into your travel routine.
Icelandic grocery chains like Krónan, Nettó, and Bónus, provide a range of food options, from snacks to full meals. For instance, you can prepare a hearty Icelandic lamb soup using local ingredients for a fraction of the cost of eating out and consuming the same meal.
When choosing accommodation, choose those that have a kitchen or access to one. This will make it easy to prepare homemade meals with ingredients you purchase at the grocery store.
Instead of fine dining establishments, which can be costly, don't miss out on sampling Icelandic street food. Try visiting Bæjarins Beztu Pylsur in Reykjavik, where you can enjoy a famous hot dog for about $4—much cheaper than a sit-down meal.
By choosing to cook or pack your own lunches for day trips, you can significantly cut down on food expenses throughout your travels. Consider bringing a freezable lunch box on your trip so you can enjoy lunches on the go. In addition, committing to even one meal in your accommodation per day (such as breakfast) can cut costs significantly over the course of your trip.
Bring Snacks
From Home or the Grocery Stores
Bringing snacks from home can save you a lot on your trip. Items like dried fruits, nuts, and granola bars can prevent unnecessary cravings during long explorations. These items are likely cheaper in your home country, so pack as many as you can manage to squeeze into your luggage. Of course, make sure to check restrictions on food products brought into the country. Usually, restricted items include fresh meat and dairy products.
On our first trip to Iceland (pre-kids), we brought water bottles, packets of ramen, and pop tarts in our suitcase (still laughing about this!) - we did save some money though.Once you arrive in Iceland, you can find affordable local snacks such as Skyr, a yogurt-like dairy product, or traditional rye bread at grocery stores. Both options allow you to indulge in authentic Icelandic flavors without overspending.
Also, be sure to bring a refillable water bottle to save money on bottled water. Tap water in most places in Iceland is safe to drink. In Iceland, a single bottle of water can cost over 3 USD! And make sure you bring a freezable snack bag to keep refrigerated snacks and fruits cold on your daily excursions.
Book an Airbnb
Not Hotels
For budget-conscious travelers, opting for an Airbnb can lead to significant savings compared to hotels. And a bonus is that they typically offer a lot more space than you would get booking a single hotel room.
Airbnb rentals often provide lower rates and include kitchen facilities, allowing you to prepare meals during your stay. For instance, you could find a cozy Airbnb for around $80 to $150 per night, offering savings over a hotel priced at $200 or more.
If you want to save money on food costs by grocery shopping, booking an Airbnb is the way to go. You can also save money in other areas, such as laundry (if the listing provides a washer), if you're planning on traveling for an extended period of time.
Moreover, staying in an Airbnb can give you a glimpse into local Icelandic life, making your journey richer and more authentic. You may even get the chance to meet and converse with a local family, gaining valuable insight into the country.
We recommend using third-party sites to compare options, as you may find more affordable alternatives available elsewhere. For instance, Booking.com and Expedia offer a variety of accommodations, including apartments and homestays, not just hotels. These sites sometimes provide better deals than Airbnb, so it's worth exploring them.
Travel in a Group
to Split Costs
While solo travel in Iceland has its perks, gathering a group of friends or family can lighten the financial load significantly.
By sharing expenses for accommodations, car rentals, and meals, you can lower your costs. For example, if you group rent a car priced at $400 for a week and split it among four, each traveler pays just $100.
The same works for an Airbnb. If you have a group of couples, you can share a 2-bedroom Airbnb, splitting the cost in half. This can make accommodation much more affordable.
We recently traveled to Iceland as a group of 6; me, my husband, our 2 kids, and the in-laws. We booked Airbnb's that were 2-3 bedrooms and split the costs in half. This saved us a considerable amount of money over the course of our 10-day stay.
Sharing travel experiences fosters camaraderie and creates lasting memories, making it even more worthwhile.
Renting a Car
is Cheaper than Day Tours
If your itinerary includes multiple attractions, renting a car can often be more cost-effective than booking individual tours. This is because most tourist attractions in Iceland are actually free.
Renting a car allowed us to explore so many amazing places at a slower pace.
Gullfoss Falls, Thingvellir National Park, Strokkur Geyser, Reynisfjara, and the waterfalls along the south coast are all free of charge. You will only pay to park, which is around 1,000 - 1,300 ISK for the day.
Guided day tours can cost upwards of $100 to even $200, while a rental car may cost around $50 to $100 per day, depending on the model and rental duration. This means that renting a car can be cheaper than paying for tours of everything you want to see.
This will also give you the flexibility to visit hidden gems, such as Reykjadalur, one of Iceland’s hidden geothermal pools, without being tied to a tour guide's schedule. You won’t feel rushed with limited time at each site and will be able to fully enjoy each stop on your own time.
We really appreciate this when traveling with kids because we tend to need to go a bit slower, working in time for little legs walking, extra bathroom breaks, and working in nap times.
By exploring on your own, you can customize your adventure and make unplanned stops at scenic spots, enhancing your travel experience. You'll also have the freedom to stop at out-of-the-way dining locations to avoid restaurants at main tourist sites, which may be more costly.
Check out our complete guide to renting a car in Iceland here!
Choose Natural Hot Springs
Over the Blue Lagoon
Though the Blue Lagoon is a popular attraction, it can come with a steep entry fee of about $100 per person. Instead, opt for natural hot springs. Lesser-known spots like the Secret Lagoon offer similar experiences for about $25.
Better yet, try Reykadalur Hot Springs, which is entirely free. Enjoying Iceland's natural geothermal baths can be just as relaxing and budget-friendly, allowing you to enjoy the landscape without excessive costs. Just make sure to bring your own towel!
Watch Flights
to Know When to Book
Flight prices tend to fluctuate, making airfare one of the largest expenditures when planning your trip. Start tracking flight prices early using tools like Google Flights , Hopper, Expedia, or Skyscanner.
By monitoring price changes and historical data, you can identify the best time to book. Many travelers save an average of 20-30% by booking their flights two to three months in advance. However, note that you should start watching your flight around 10 months ahead so you can score the best deal.
Also consider utilizing frequent flyer miles or credit card points to help reduce travel expenses, making your trip to Iceland more affordable.
We recommend the Capital One Venture X Card, which has a generous sign-on bonus and offers 5X miles on flights booked through their travel portal.
In addition, their travel portal is linked with the flight tracker Hopper, which allows you to track flight prices directly through the Capital One travel portal. You will receive email notifications when prices are a great deal and if the price drops after you book, you can get up to $50 back per traveler (we have received this on two occasions in the last year!)
To read more about our favorite travel credit cards, click here!
Use Budget Airline Play
For those willing to sacrifice a few amenities, consider flying with budget airline Play. Although its services might not match larger airlines, it offers affordable flights to Iceland and nearby destinations, often significantly cheaper than traditional carriers.
Traveling with a budget airline requires some flexibility. The potential savings can be substantial, making this option appealing for cost-conscious travelers.
These flights won’t offer in-flight entertainment, free meals, wifi, or power outlets. But what they do offer is a budget-friendly way to reach your destination.
Keep in mind that budget airlines will charge you for baggage, including a carry-on, so it’s important you factor in costs for the luggage you intend to bring.
As a family of 4, we took 2 checked bags to Iceland on Play and 3 carry-ons. The cost of the flight plus our baggage was still significantly cheaper than if we had chosen to book with a non-budget airline.
Travel Light
Only a Carry-On
Efficient packing is essential for saving money on travel. By traveling with just a carry-on, you can avoid checked baggage fees that quickly add up.
Play Airlines is the budget airline for Iceland and although they do offer a few fare classes, in most cases you’ll end up paying for your checked bag and carry-on. Save these extra costs by packing as lightly as possible, ideally only taking a carry-on.
Create a thoughtful packing list to ensure you have essentials while leaving unnecessary items behind. Many travelers find they can manage with just a few versatile outfits, especially in Iceland’s mild weather.
For more information on packing, check out our Essential Iceland Packing List!
For our Complete International Packing List, click here!
Use Free Nights or Points
Through Hotel Loyalty Programs
To maximize savings on accommodations, explore hotel loyalty programs, which allow you to earn points for stays that can be redeemed for free nights.
Joining these programs is often free and can lead to significant savings if your stay lasts longer than a couple of days. Before your trip, check for any hotels in Iceland that are part of these programs to make the most of your loyalty points.
Some loyalty programs to explore would be IHG One Rewards, Hilton Honors, Marriot Bonvoy, and World of Hyatt.
Our favorite program for free nights and other upgrades is the IHG One Rewards. Paired with their IHG Premier credit card, you earn a welcome bonus worth 4 free nights. You also receive one free night each year and bonus miles when you book with any of their hotel brands. Check out more information here. Or read more about our favorite credit cards here.
Budget All Expenses
and Look Up Costs Ahead of Time
Before you set off for Iceland, take time to budget for your trip. This includes accommodations, food, activities, transportation, and souvenirs.
Researching specific attraction costs and daily expenses will help you create a realistic financial plan. Knowing what to expect can ease financial stress, allowing you to focus on enjoying your trip.
For detailed information on creating a travel budget and planning an affordable vacation, check out our Budget Traveler's Guide.
Enjoy Your Icelandic Adventure
Traveling to Iceland doesn’t have to involve sacrificing comfort or experiences due to high costs. With these money-saving strategies, you can savor the beauty of this unique land without overextending your finances.
From grocery shopping and preparing meals to exploring natural wonders and tracking flight deals, each small adjustment can lead to meaningful savings. Plan smart, travel light, and embrace a sense of adventure, and you’ll immerse yourself in the magic of Iceland while keeping your budget intact. Happy travels!
Planning a trip to Iceland, check out our complete Iceland Travel Guide!
Happy Travels from The Gabbett Family!
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