Best ways to spend travel money in Iceland: Debit & prepaid cards

Learn more about the best card to use, if you should use a UK debit card and other ways to take spending money to Iceland.

Iceland is a destination on many a traveller’s wish list, but it’s often pushed to the back of the queue due to the fact that it’s pretty expensive. But how pricey is it really? And how much money do you need for a trip?

Iceland’s local currency is króna, written ISK. The euro, despite popular belief, is not an official currency in the country, despite many tourism companies displaying their prices in euros, which is illegal according to Icelandic law.

Make no mistake about it, once you’re in Iceland you’ll have to use Icelandic króna in most places.

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The best way to take travel money to Iceland is to use a card with low or no currency conversion fees, as well as one that won’t charge you foreign ATM transaction charges, meaning you can withdraw, spend and use the local currency, króna, with ease.

Using debit cards

Much like a prepaid travel money card, a travel debit card lets you spend your own money. You can use a debit card over the counter and to withdraw money from ATM where Visa and Mastercard are accepted throughout the country, which is most places.

Using prepaid travel cards

There are a few travel cards which allow you to load, withdraw or spend króna – one of them being WeSwap.

  • Tip: If you are able to use a prepaid travel card for a purchase and you’re asked whether you want to pay in sterling or króna, always pay in the local currency. You’ll lose out on the exchange rate otherwise.

Using credit cards

Visa and Mastercard credit cards, the majority of cards issued in the UK, are widely accepted in Iceland. The currency conversion fee (or lack thereof) is what to look for.

There are a handful of credit cards which let you spend in another currency without paying the extra 3%. Check with your credit card provider to see if this is a favourable option for you. But be sure to watch out for cash advance fees and charges if you make a withdrawal on credit; it’s one of the most expensive ways to get cash.

  • Tip: Some credit cards offer complimentary international travel insurance when you charge the cost of your travel ticket to your card.

Using traveller’s cheques

Avoid traveller’s cheques if you can – this travel money product is more hassle than it’s worth in Iceland. Card payments are the norm and provide a money back guarantee if you’re the victim of fraud. These features have made traveller’s cheques redundant over the last few years.

Using an ATM in Iceland

ATMs are not as easy to find in Iceland as you might think. It’s advisable to take a debit card or credit card with you that won’t charge high transaction fees. This means you’ll avoid searching for an ATM if you run out of cash.

Paying with cash in Iceland

Very few locals use cash to pay for purchases or carry it around with them. The most popular form of payment is via debit or credit cards, which can be used in pretty much any transaction.

Exchanging cash

Exchanging cash can be a tricky affair in Iceland as ATMs are sometimes few and far between, especially in remote areas. Our best advice is to arrange to collect your local currency before you fly to Iceland to get the best rate. If not, withdraw your Icelandic currency at Keflavik Airport. While you may be charged a small fee, this is the safest option for withdrawing local currency in Iceland.

How much money to take

One of the most important things to remember when travelling to the country is that locals are not big on carrying money, which means the preferred payment method is either debit or credit cards.

The only exception to this is on city buses or in public toilets where you’ll often have to pay the exact amount in change.

But it will still serve you well to have a little bit of cash on you. If you haven’t collected this before flying to Iceland we highly recommend withdrawing Icelandic currency at Keflavik Airport.

This is because some areas of the country are pretty remote and there aren’t too many banks or ATMs around. While there are multiple options in Reykjavik, if you are going outside of the city and you want cash currency in Iceland, you need to be prepared.

There will, of course, be a small fee for withdrawing Icelandic money, but it’s better to have some rather than none at all should you need it during your trip.

How much money do I need to bring to Iceland?

It’s true that a holiday in Iceland is one of the most expensive in Europe. While you should use a debit or credit card for your trip, it will help to know how much to budget for and put aside.

There are five main categories of spending that will go into your average costs. These include accommodation, transport, food, activities and entertainment.

Depending on your travel style and tendencies, it’s possible to save a lot on many of these things in order to spend more on another. If you’re looking to visit this beautiful Nordic nation on a budget, staying in hostels is a better alternative to the more expensive hotel rooms.

Likewise, a camper van can be a great option and kill two birds with one stone by taking care of your transport at the same time.

Find out some typical prices in Reykjavik, Iceland

BudgetMidrangeExpensive
bldg

Hostels

£15-£25 per night

2 Star hotel
£60 – £150 per night
5 star hotel
£250 – £400 per night
utensilHot dogs (very popular amongst locals)
£5
Dinner for two at a mid-range restaurant
£50 – £60
5 star restaurant set menu
£60 per person
cameraHike to natural hot springs
for free!
Whale and glaciers watching
£60
Guided excursion to the Northern Lights
£70-£100

*Prices are for example purposes only.

Exchange rate history

As of 19 March 2024, the average rate over the last 12 months was £1 to 172.80 ISK. The low was 166.76 ISK and the high was 176.62 ISK.

Should I use a travel card, a debit card or a credit card?

In Iceland, you will have very little trouble with Visa and Mastercard acceptance. American Express is accepted in some places, but not others, so make sure to bring an alternative form of payment with you.

If you want to avoid extra bank fees, make use of a variety of cards and use each one for a specific purpose. For example, choose a card that won’t charge you for currency conversion for over-the-counter payments and a different card for ATM withdrawals – even better if you can find a card that suits both purposes.

A great option for this is to use a challenger bank like Monzo or Starling, offering no transaction fees and free ATM withdrawals. You can find out more about digital banks here.

A quick summary of travel money options in Iceland

Now that you know what currency you’ll be needing and how much of it to take, find out whether to use debit and credit cards, traveller’s cheques, cash or prepaid cards on your trip.

Debit cards for travel

  • Protected by PIN security.
  • Debit cards are widely accepted in Iceland.
  • Access funds from an ATM or pay for purchases over the counter.
  • Ideal for managing your travel budget.
  • Currency conversion fees on foreign transactions.
  • Lost debit cards while overseas can be easily blocked, but not easily replaced.
  • No emergency cash.
  • Few ATMs in remote areas of Iceland.
  • No back-up cards.

Prepaid travel money cards

  • Protected by PIN and chip.
  • Pre-load and secure your exchange rate in multiple foreign currencies.
  • Emergency card replacement and back-up cards.
  • Ideal for managing your travel budget.
  • Reloading time.
  • Currency conversion and international ATM fees.
  • May not be accepted for all transactions in Iceland.

Credit cards for travel

  • Protected by PIN and chip.
  • Access to funds up to your credit limit.
  • Accepted worldwide.
  • No currency conversion or transaction fees.
  • Benefits including rewards points on spending, 0% purchases, frequent flyer perks, complimentary travel insurance.
  • Emergency card replacement.
  • Can charge high withdrawal and cash advance fees.
  • Higher spending limit (depends on your approved credit limit).

Traveller’s cheques

  • Secure and can be easily replaced if lost or stolen.
  • Photo ID needed to cash cheques.
  • Can be costly with initial purchase charges.
  • Not all merchants accept traveller’s cheques.

Cash

  • May be needed for rare transactions like public bathrooms or bus tickets.
  • More difficult to manage expenses.
  • Higher risk of theft.
  • Icelandic locals rarely carry cash.

Buying currency in the UK

Icelandic króna is a relatively common currency in the UK, and providers such as Travelex will usually stock króna to collect before you go.

Exchange rates

It’s worth getting a good exchange rate, as this will leave you with a little more to spend on your trip. Compare your options and make sure you’re getting the best exchange rate possible.

Bottom line

Taking a debit card with no transaction or withdrawal fees is the best option for travelling to Iceland, but it’s also worth taking some cash for small payments such as bus journeys or public bathrooms.

Visa and Mastercard are widely accepted, especially within Iceland’s city regions. More remote areas may not offer ATMs, so in these situations, it’s best to take cash with you.

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Amelia Glean

Amelia was a writer at Finder specialising in style and travel. See full profile

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