Reykjavik and Iceland On A Budget – Money Saving Tips
Iceland is a land of beauty. Verdant ravines, glowing blue glaciers, jet black beaches, spurting geysers and, it must be told, some of the friendliest locals you are ever likely to meet. Iceland is also very expensive! Here are some tips & tricks from actual (self-confessed) Vikings that will save you a fortune.
Disclaimer: Some of the links on this site connect to carefully selected partners. Most have no links to me whatsoever but if you click on some links, I may receive a very modest commission.
If you’re not careful the array of wonderful bars, restaurants, and woolly jumper stores will devour your Krona as if a plague of ravenous puffins had descended upon your bank account. To give you some idea, back in July 2021 I paid the equivalent of £11 (about US$15 or Kr1,894) for a small beer and £22 ($30, Kr3,788) for a bowl of soup, bread and a Coke (though it a tasty soup). Perhaps more astonishing, I paid £1.49 ($2.08, Kr250) to use the restrooms at the BSI bus station in Reykjavik. The hotels and hostels also tend to be on the expensive side, compared to other destinations. In a mid-range restaurant, an evening meal for two, with a glass of wine will generally be over £100 ($140, Kr17,500). However, don’t despair! Iceland is beautiful, riveting, and awe-inspiring. Its unique beauty comes at a price and I for one think it really is worth the cost.
When I was there I did a South Island Tour with the excellent Troll Adventures. I decided to ask the guides, Asi and Jacob, how local Icelanders save money in this land of ice, fire and huge credit card bills.
Here’s what I found out, together with a few money-saving tips of my own. I hope they are useful.
How To Save Money In Reykjavik
Top tips on how to save money and do as the locals do in Reykjavik and Iceland.
1. Don't Buy Bottled Water
The tap water in every hotel and water fountain across Iceland dispenses filtered glacial water. It’s icy cold (even when I was there in July), sweet and pure to taste. I’ve never tasted water that was so refreshing, and missed it as soon as I left for home. This water is brimming with healthy minerals, and is literally on-tap everywhere you go. And it’s free!
Most taps (or faucets for my American friends) deliver both hot and cold water from a single stem, so be sure to run the cold tap for a minute or two to ensure the pure cold water is flowing. The hot water is also natural spring water and thermally heated. However, unlike the cold water, it isn’t filtered. That’s why your shower will have a pungent, yet strangely alluring, eggy stink.
My Golden Triangle guide, Jacob, reliably informed me that the “Glacial Water” you buy in plastic bottles, is in fact from the same source as the free tap water. You’re paying for the fancy label. Don’t buy it!
Beware: Although there are many natural springs dotted around the island, especially on and around the glaciers, not all contain potable water. Only drink or refill your bottles from the clear, fast-flowing streams. According to Asi, if the water isn’t flowing (stagnant), any cloudiness or smells a bit sulphurous, then it’s likely full of toxic minerals and gases from the volcanos.
This is me drinking straight from the flow on a glacier in the South.
2.Value for Money Dining
2.1 Eat The Famous Icelandic Hot DoGS
Street food in Iceland is a relatively new phenomenon but there’s is a growing industry. The hot dog has been a staple of the Icelandic fast food scene for decades. They’re mainly sold at a handful of cabins or street carts dotted around Reykjavik. The hot dog is a great way to enjoy a delicious meal for very little outlay. Randy, an American tourist I met on the South coast tour, said they came a close second to Chicago’s finest dogs. I tried Baejarins Bezto Pylsur (Jacob’s favourite Hot Dog cart) which can be found in the Old Harbour district (Tryggvagata 1). I went for the “full monty” with both cooked and (unexpectedly tasty) dried onions, mustard, ketchup, and a mysterious, secret brown sauce that tastes much better than it looks. Outside of Reykjavik, most of the truck stops or service stations have hot dog stalls inside, all were as delicious as the capital’s offerings. Kr550 (about £3.20 or $4.50) got me the works in Reykjavik, slightly less in the wilds. Though be warned, you may have to buy seconds!
2.2 Dine at the Street Food Markets
If you’re seeking a low-cost, delicious meal in Reykjavik but don’t fancy yet another hot dog, then try 101 Reykjavik Street Food (Skolavoroustigur 8). I tried their Seafood Soup which for K1,850 (£10, $15) was both delicious and surprisingly filling. Chunks of flaky, white fish, langoustine tails, prawns and scallops wallow in a slightly spicy seafood and lobster bisque.
There are several other street food places where you can get a relatively cost-effective meal. They sell a mix of local and international food, and a broad range of craft beers and cocktails. Hlemmur is set on its namesake square at the junction of Laugavegur and Rauoararstigur. The Grandi Matholl Food Hall is on Grandagarður street, which can be found on the North-Western side of the old harbour. Don’t expect grand food halls like you’ll find in the UK or Europe. Apart from the vast landscapes, most things in Iceland are down-scaled.
2.3 Don't Ignore Iceland's Service Stations
Whilst exploring the South Coast, we ate lunch at various nondescript, shabby-chic service stations. They’re no more than ramshackle pre-fab buildings, usually behind a set of petrol pumps. Inside you’ll find a usually busy canteen-style restaurant. It was in one of these places, the Veitingasala Restaurant on the main ring road near Skaftafel, that I ate one of the most tender lamb shanks I’ve ever had. The meat simply fell from the bone. For around Kr2,250 (£14, $19), it was surprisingly good value and certainly on a par with UK prices for something as well cooked.
4. Use the eScooters
You’ll spot them everywhere around the streets of Reykjavik. Brightly painted yellow or green eScooters that have seemingly been abandoned in random locations. You can hire them after downloading either the WIND or Hopp app, and register your credit or debit card (or Apple Pay for WIND) to make hire payments.
Just grab a scooter (the app shows you where they are on a map), scan the barcode and you’re away. When you’ve finished, end the hire on the app, take a photo of where you’ve parked and walk away. On my second day, my hotel was about a mile out of the centre, but for about £1.50, the scooter made light work of the trip into town.
TIP: check the battery charge level before hiring.
5. Forget the Thermal Spas, Use the Public Swimming Pools
If visiting the Blue Lagoon isn’t on your bucket list but you’d still like to experience bathing in geo-thermally heated pools, head for the public swimming pools. There are lots to choose from in downtown Reykjavik, Vesturbæjarlaug being my favourite. For around 1060Kr (£6.20, $8.60) you can swim lengths or laze in the various bubbling spa pools, each with varying degrees of heat.
Please Subscribe
Before we move on to money saving tip number 6, can I ask a favour?
Please SUBSCRIBE to The Reluctant Backpacker and receive updates when I publish a new post or article.
Thank you for your support.
6. The Airport Duty Free Is Cheaper (Yes, ReallY!)
I know it may be hard to believe, but I found that the Duty Free shops and cafes in Keflavik airport actually are cheaper than in town.
Some take bottles of alcohol to Iceland, but you can also buy it at the airport when you land as it’s available for arrivals as well s departures. Stock up, especially if staying in self-catering accommodation.
7. Buy a Reykjavik City Card and Save Cash
At 6000Kr (£35, $48) for a 2-day pass, the City Card isn’t cheap but if you plan to use the buses, visit a swimming pool for the thermal bath and take in at least one of the museums, then it can be cost-effective. Various sites offer City Cards and you can buy them in most stores and at the BSI terminal.
8. Join a Free Reykjavik Walking Tour
You all love cheap things to do, right? How about something that’s completely free, no catches? Jacob’s best money-saving tip was to take advantage of the free City Walking Tours run by history students from the city’s university. You’ll save about 6000Kr (£35, $48) on the cost of one of the tour company guided walks. The students are doing the walks voluntarily so a small tip at the end isn’t unwelcome, if you feel hey’ve done a good job. You need to book the tour in advance as they tend to fill up quickly. This is a brilliant, free way to orient yourself when you first arrive. Why would anyone not do this?
9. For Cheap(ish) Drinks Download the Appy Hour App.
Reykjavik has many great bars selling a vast array of local and international craft beers and innovative cocktails. However, as you’ve probably sussed by now, like almost everything else in Reykjavik drinks cost an arm and a leg! Expect to pay about £11 for a small beer, and £20-25 for a cocktail.
However, most bars have “happy hours” usually lasting 2 or 4 hours, with up to half-price drinks and food available. The Reykjavik Appy Hour app for iPhone or Android will guide you to the nearest bar with a happy hour in full swing. Use the app to pick the best-priced drinks as you make your way around the city, happy hour bar surfing Icelandic style.
As an aside, my two favourite bars and my recommendations for any fellow Craft Beer lovers are Bastard Brew and Session Craft bars. The former also does excellent burgers.
10. Save £££s On Foreign Exchange Commission Charges
If you’re traveling from the UK, chances are the ATMs in Iceland won’t work. Many UK banks don’t allow ATM withdrawals on debit or credit cards since the Icelandic banking crisis and the uncovering of huge fraud and money laundering schemes. Check with your bank before you leave home.
However, don’t despair. I discovered this fact on my first night. I was worried as I had no cash on me at all. However, everywhere takes contactless debit/credit cards or Apple Pay. Indeed due to Covid-19 hygiene rules, most places only take card or contactless payments. I managed to last an entire week without a single physical Krona to my name.
Also, if you use one of the new breeds of banks, such as Starling Bank, you also won’t pay a penny more for the transaction in fees when you use your debit card. It doesn’t have to be your main current account. I always use my Starling debit card when I travel. I can move money to it from my other accounts each day, so if it was to be stolen or lost, there is a limit to the amount I would lose. There are no commission fees for foreign purchases nor, in most countries where it’s supported, fees for ATM cash withdrawals. It’s really worth getting one of these accounts.
11. Avoid the 10-11 Grocery Stores in Reykjavik City Centre
Jacob told me that the small 7-11 stores (known locally as 10-11 stores) in the city centre often mark up prices by 100%, sometimes changing them late at night when they know the drunken tourists will call in to buy snacks or drinks.
Instead, hop on an eScooter or bus and find the nearest supermarket for your supplies. Even the stores at the petrol stations are more cost effective. Reykjavik isn’t very big so you won’t have to walk or scoot very far to find a supermarket.
Save, Save, Save
Hopefully, my hints and tips will help you get even more out of your holiday to Iceland. It is an expensive country to visit, but with a little imagination, you can stretch even the tightest of budgets.
If you’ve found this article useful, or have any other money-saving tricks to share, please let me know via the comments.
Watch this space for upcoming articles on my tours around this magnificent country, including a Golden Circle tour and a south coast tour taken with the brilliant Troll Expeditions. Try combining several tours to get a multi-tour discount (see the Troll website for information).
Please Subscribe to my blog to be sure to get a notification when the articles are published.
An Introduction To Iceland
April Newton
Went to Iceland a few years ago and wish I’d known this then.
I’ll be organising a return trip to test out the tips!
ReluctantBackpacker
Thanks April. It’s a wonderful island isn’t it?