The use of credit and debit cards is very common in Iceland; people rely on them to pay for even the smallest of purchases. Almost all hotels, and most businesses, in the country accept cards, and you can even use yours to pay for a cab ride, a coffee or a pot of Skyr.
The most commonly accepted cards are ones with Visa and Mastercard branding, although American Express and Diners Club cards find takers as well. Acceptance of Maestro, Electron and EDC debit cards is on the rise. Hardly any establishments accept Discover cards.
What's in this guide?
Cards with fee-free currency conversion in Iceland
Cash machines 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 cash machines in most villages. What you need to remember is not all ATMs in Iceland remain accessible round-the-clock. Most cash machines accept international credit, debit and cash cards, although you might want to look for the Cirrus or PLUS logo. ATMs in the country give you a reliable way to get cash, providing competitive exchange rates.
And the best news? You can use most ATMs in cities and large towns in English!
Cash in Iceland
You’ll need to pay for most small purchases in cash. Keep a few thousand króna in cash to pay newspaper vendors, cafes, restaurants, bars and small souvenir shops.
Chip and PIN
Iceland has moved from magnetic-stripe to chip cards, and all banks in Iceland now issue the latter. You’ll still be able to use your magnetic-stripe card in Iceland – you just need to sign a receipt to verify the transaction.
You can use your chip-and-signature card across most places in Iceland. If you don’t have a PIN, you’ll simply need to sign a receipt and probably show an identification document such as your passport. You will have problems using your card at machines that are not staffed. Examples include petrol stations, automated parking machines, some public toilets, transport ticket vending machines and food/drink dispensing machines.
Some supermarkets don’t encourage the use of chip-and-signature cards because processing them takes more time. Some businesses don’t allow their staff to accept cards with signatures just to avoid confusion.
Is it safe to use my card in Iceland?
By exercising some caution when using your credit card in Iceland, you’ll have a relatively trouble-free experience.
- Keep your PIN safe. Use one hand to enter the PIN and the other to shield it from prying eyes and hidden cameras.
- Select ATMs with care. Try and stick to ATMs in banks and avoid using ones in the street.
- Watch out for “skimmers”. When installed in an ATM, a card skimmer works by stealing information from credit and debit cards. If you feel the card slot is not as smooth as it should be or if there’s a problem with the keypad, cancel your transaction and look for another ATM.
Keeping your credit card (physically) safe
Remain alert to street crime, especially where two or more people work in distracting victims before decamping with their valuables.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. Don’t leave 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 not uncommon.
Potential credit card fees
Credit card fees can leave a noticeable dent in your pocket when you’re travelling overseas, so know what you’re up against well in advance and choose a card with no or low fees.
Foreign transaction fees
British credit card issuers typically charge a fee equivalent to 1% to 3% of your transaction, so carefully review your card’s fine print to avoid statement surprises. Some cards designed for travel come with no foreign transaction fees, so this could be a good time to switch.
Currency conversion fees
If a retailer offers to bill your credit card in sterling, dynamic currency conversion comes into play. While this might sound like a good deal, you’ll actually end up getting a worse exchange rate, and you might also end up paying currency conversion fees. Whenever you’re presented with an option, choose to pay in local currency.
Cash advance fees
Using your credit card to withdraw money from an ATM may not make sense unless it’s a bona fide emergency. Each time you withdraw funds from an ATM, you’re likely to pay a cash advance fee. Your APR for cash advances is typically higher than your purchase APR, and you’ll typically get no grace period on interest — instead, you start paying interest immediately. Again, some cards designed for overseas spending will waive the cash advance fee.
The table below serves as an example of how much extra you may pay to use your credit card for in Iceland.
What is a cash advance fee?
A cash advance fee is calculated (and charged) when you withdraw cash from your credit card. It’s usually the greater of a flat fee or a percentage of the transaction. For example, “2.5% of the transaction, minimum £3.00”.
How to prepare before travelling to Iceland
- Go with Visa or Mastercard. Carry at least two cards on your trip to Iceland, preferably connected with Visa or Mastercard. If you just take an American Express card, you won’t get to use it in many places.
- Think no foreign transaction fees. When there are cards that come with no foreign transaction fees, using ones that charge 2% or 3% of each overseas transaction does not make sense. Some of these cards don’t charge an annual fee, either.
- Keep your bank posted. Banks, in their efforts to thwart fraudulent transactions, block credit cards if they detect suspicious activity such as unexpected overseas transactions. To make sure this does not happen to your card, let your bank know about your travel plans before you leave the UK.
- Keep the emergency number handy. Know which numbers you’ll need to call if you end up losing your card or if you need an emergency replacement.
- Know where you’ll get cash from. Consider using your debit card to withdraw cash from ATMs. If you need to exchange money, stick to banks or official money-exchange offices because possessing counterfeit money in Iceland is a serious crime. Try to avoid exchanging money at airports and popular tourist destinations because of typically poor exchange rates.
Ask yourself these simple questions before you leave so your spending in Iceland does not hit any roadblocks.
- Which cards will I take? Visa and Mastercard are the favourites. If you’re planning a trip, check out cards which give you complimentary airport lounge access. If you’re planning well in advance, consider earning air miles for your trip with a frequent flyer credit card.
- Have I let my bank know? If you don’t inform your bank about your travel plans, you may end up with a temporarily suspended card.
- What fees do I need to pay? If your existing cards come with foreign transaction fees, look for one that does not. Paying in Sterling outside of the UK might come with currency conversion fees.
- How will I get cash? Using your debit card at an ATM is the simplest way to access your own money. You can carry cash and traveler’s cheques with you. Exchanging sterling to króna is easy and you’ll get several options.
When you’re in Iceland, you don’t have to worry about where and when you can use your credit card. Just keep some cash handy to pay for small purchases.
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