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Using a credit card in Iceland
The use of credit and debit cards is very common in Iceland, with locals and tourists alike using them to pay for even the smallest of purchases.
Both credit and debit cards are widely accepted in Iceland, with most hotels and businesses accepting Visa and Mastercard branded cards. Some merchants may accept American Express, but it’s best to travel with at least one Visa or Mastercard in addition to your Amex. Credit and debit cards are so commonly used in Iceland that you can even pay for the smallest purchases with plastic such as a taxi ride, a coffee or even an ice-cream.
Compare credit cards for use in Iceland
Potential credit card fees in Iceland
- Foreign transaction fees. Most credit cards issued by Canadian banks come with foreign transaction fees. Sitting around 2.5% of the total transaction cost, you’ll need to pay this fee every time you use your credit card outside of Canada. Fortunately, there are a few credit cards that offer no foreign transaction fees in Canada.
- Currency conversion fees. If someone gives you the choice of paying in Canadian dollars or Icelandic króna with your credit card, always choose the local currency. Paying in Canadian dollars with your card will subject you to a dynamic currency conversion that can lead to poor exchange rates and currency conversion fees. When outside of Canada, always choose to pay in the local currency and let your bank do the currency conversion.
- Cash advance fees. If you use your credit card to withdraw money from an ATM, you’ll face a cash advance fee. In addition, you’ll also be charged interest from the day you withdraw the funds. There is usually no grace period with a cash advance transaction and the cash advance interest rate is often higher than the purchase interest rate. Instead, use your debit card to withdraw funds from an ATM.
- ATM fees. Even using your debit card to withdraw funds from an ATM will likely have you facing an ATM fee. To avoid this fee, you can use a debit card issued by a bank that has an international ATM alliance, such as the Global ATM Alliance offered by Scotiabank.
ATMs in Iceland
ATMs are easy to find and you’ll see a few as soon as you arrive at the Keflavík International Airport. You’ll also come by ATMs in most towns and villages. However, ATMs in Iceland don’t always remain accessible round-the-clock, so it’s best to withdraw money during business hours just in case. Most ATMs accept international credit, debit and prepaid cards, although you might want to look for the Cirrus or PLUS logo.
Should I use my credit card to get cash?
As mentioned above, using your credit card to get cash from an ATM is not recommended. You’ll end up paying a cash advance fee as well as interest, which will start adding up from the day of the transaction. The APR for cash advances is typically higher than the APR for purchases. If you need to withdraw cash from an ATM, it’s best to use your debit card.
Paying for gas
Some gas stations don’t accept cash – so it’s best to travel Iceland with at least two different credit cards. If you want to ensure you don’t run into any problems paying for gas, you can buy some prepaid gas cards in Iceland. However if you choose to buy prepaid cards, you’ll need to select a specific brand of gas station. N1 is the most recommended gas station brand due to its extensive coverage throughout Iceland.
Is it safe to use my credit card in Iceland?
While it is safe to use your card in Iceland, you should exercise the same level of caution as you would in Canada.
- Keep your PIN secure. Don’t write down your PIN anywhere. When using a keypad to enter your PIN, use your other hand to shield the screen from curious onlookers and hidden cameras.
- Choose ATMs carefully. Try and stick to ATMs found in public places and banks. Avoid ATMs in isolated areas.
- Keep your card physically safe. The crime rate in Iceland is low and using common sense can help ensure your card’s safety. Don’t leave your bag on the floor at a bar or a nightclub and avoid leaving your wallet or bag in a parked car. Downtown Reykjavik might become unruly late at night as people leave clubs and bars, with instances of petty theft occasionally occurring.
How to prepare before travelling to Iceland
- Carry suitable cards. Visa and Mastercard are the most widely accepted credit card brands, with American Express occasionally accepted in Iceland.
- Avoid foreign transaction fees. If you don’t have a card with no foreign transaction fees, think about getting one before you go. Foreign transaction fees usually cost around 2.5% and they can add up quickly if you use your card often.
- Tell your bank. In an effort to minimize fraudulent transactions, banks temporarily block cards if they detect suspicious activity. If you don’t let your bank know that you plan to travel to Iceland, you might end up with a suspended credit card.
- Keep emergency numbers handy. If your credit card is lost or stolen, you’ll need to call to get a replacement card sent to Iceland. Make sure any phone numbers you need remain easily accessible at all times.
- Know how you’ll get cash. An affordable way to access cash is to use your debit card at an ATM. Exchanging Canadian dollars for króna is also possible at banks and currency exchange offices. Avoid currency exchanges at hotels and airports due to high transaction fees and poor exchange rates.
Ask yourself these questions in order to avoid common credit card related problems in Iceland.
- Which cards will I use? Visa and Mastercard are the most widely accepted brand of credit cards, but you may find some businesses that accept American Express. Consider taking at least two credit cards with you on your travels.
- Does my bank know? If your bank is not aware of your upcoming trip, you may have to deal with a temporarily suspended card. Always notify your bank or credit card provider of your overseas travels.
- What fees will I face? Read your credit card terms and conditions or call and ask your credit card provider if you’ll face any foreign transaction fees. Remember, you can easily avoid currency conversion fees by paying in the local currency.
- How will I get cash? Your options include using your Canadian debit card at a local ATM, exchanging money or carrying travellers’ cheques. Avoid using a credit card to withdraw money from an ATM unless its an emergency.
Using a credit card in …
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