The Ultimate Guide to Traveling Iceland on a Budget

Iceland on a budget

blog authorBy Johanna Sigurðardóttir shield verificationVerified Expert

    Iceland is known for being an expensive travel destination. And even though there are very valid reasons for this, it doesn’t help those a bit strapped for cash much. So, is it possible to visit Iceland on a budget?

    The short answer is “absolutely!” There are plenty of travel hacks, tips, and tricks that will allow you to explore the island without having to break the bank. Read on to find out how to travel Iceland cheap.

    How Much to Budget for a Trip to Iceland in 2023

    You won’t be able to start budgeting for your cheap Iceland vacation if you don’t have anything to work from. So, we’ve created this helpful overview of general costs and expenses :


    • A general average of all accommodation options (except camping) = +/- $115 per day


    • Domestic Flights = +/- $70-$100
    • Bus = $10-$15
    • Car Rental = $45-$200 per day + the cost of gas


    • When Eating Out = +/- $80 per person per day
    • When Eating In = +/- $15 per person per day
    • When Planning on Doing Both = +/- $50 per person per day


    • General Average = $30 per day
    • If You’re Planning on Going on Guided Day Tours = $65-$250 per tour (and opt for the more affordable Iceland tours)

    (For a more thorough budget analysis, read our article ‘The Cost of an Iceland Trip

    Iceland on a budget

    Helpful Tips When Traveling Iceland on a Budget

    Just because you know what the general prices of things are, and you try to budget accordingly, doesn’t mean that you can’t save any more money. The following tips and tricks will help you when traveling to Iceland on a budget:

    Go With Quality Over Quantity

    This might not be what you want to hear, but if funds are extremely limited, you’ll still be able to visit the island, but just for a shorter amount than you’d like. Time to travel to Iceland for fewer days, but make those days count!

    Opt for the Various Free Attractions

    Luckily, some of the attractions on the island are already pretty budget-friendly, with many being entirely free. Visiting the national parks in Iceland is free, taking a dip in some of Iceland’s natural hot springs is free. Likewise, going to see one of Iceland’s waterfalls (and we have 10 000 of them!) is free.

    And there are plenty more! So, instead of going on guided tours (yes, even the cheap Iceland tours) or taking part in activities that cost extra, stick to those that you can enjoy without worrying that the budget is blown. 

    Get Yourself a Campervan

    We are strong believers that the best way to explore the island is by making a road trip out of it. So, in our mind, a rental vehicle is an absolute must. If you want to save money, why not combine your accommodation and transport? By renting a campervan in Iceland, you’ll be able to travel and stay in comfort.  

    Go Camping

    Camping will always be a great way to save on accommodation costs. And if you don’t consider yourself the prime candidate for an outdoor series, you can still go “camping” in your campervan.

    Camping costs don’t even come close to other accommodation options. You'll see it if you compare the $10-$20 per person per night to the accommodation costs mentioned above. If you want to save even more money, you should buy yourself a Camping Card. It will only cost you €159 and will grant access to a family of 2 adults and up to four children to various campsites across the country for 28 nights.

    Cheap camping in Iceland

    Visit During the “Down” Season

    Everywhere you go, there will be what is considered to be a peak season and a “down” season. With peak seasons come peak season crowds and peak season prices. In Iceland, our peak season is considered to be the summer months (June to September). So, if you visit the island during the wintertime or one of the shoulder months, you’re likely to pay far less for your trip.

    Ask Your Rental Agency for Vouchers

    Your rental agency will have partnered with various businesses across the island. You’ll be surprised what you can walk out with if you ask them about discount vouchers. From food and accommodation to gas and local activities – there will be plenty of perks a rental agency can offer you.

    Shop Around for Gas

    All gas stations do not charge the same for gas here in Iceland. That’s why you need to plan where you fill up. Ask your rental agency and some of the locals, and they’ll be happy to point you in the direction of their go-to gas stations.

    Go Bargain Hunting

    When you are planning a trip to Iceland, do your research and see if you can’t find any specials on offer. You might find a cheap flight or 2 for 1 activity or restaurant specials. All these things will add up to impressive savings.

    Always Book Directly

    If you have done your research and want to book accommodation or activities, get off the third-party platforms. It is almost guaranteed that the platform will be more expensive than if you book directly.

    Avoid Taxis

    Airport shuttles are one thing, but continuously using taxis for short trips all across the island is an absolute no-go. You’ll almost burn through your entire transport budget in a day. Either opt for renting your own economical car or campervan at a rental agency or make use of the public transport on the island. 

    cheap Iceland vacation

    Get a Bus Pass Instead of Paying for Once-off Trips

    There are a few bus pass options when it comes to Iceland. You can buy a pass that will allow you to ride on a certain bus for a day/week/month or that gives you unlimited hop-on-and-hop-off access to buses in the city. These types of passes will almost always work out cheaper than constantly purchasing tickets for once-off trips. You’ll surely use them much more than you think.

    Bring a Buddy

    It doesn’t matter where you are in the world, solo travel will always be more expensive than traveling as a couple or in a group. For example, you might pay $300 for a hotel room as a solo traveler, whereas they may otherwise charge $130 per person sharing.

    Or you can opt for a cheap hostel stay at $50 per person in a dorm when an Airbnb of $300 per night divided by a group of 6, will work out the same. However, you’ll have your own space with all the added private amenities.  

    Choose the Right Car

    There is no reason why you need to be driving the latest and greatest model with all the bells and whistles attached. It also makes no sense to get a 4x4 if you’re going to be spending all your time in the capital city. By choosing the right rental car for your specific needs and requirements, you can also slash some money off of rental fees.

    Save on Insurance

    It is always a good idea to be well-prepared, but some tend to go overboard. A million-dollar medical coverage on your travel insurance is more than sufficient for your 2-day trip to the island. And you don’t need to have snow damage coverage when you’re visiting at the height of summer.

    Be reasonable and speak to your rental agent. This way, you don’t splurge unnecessarily on extreme insurance amounts and policies that you’ve got a 0.000001% chance of ever using.

    Give Someone a Lift

    Iceland has (yet again) officially taken the title of the safest country in the world. The odds of you ending up in that hitchhiker horror movie is practically zero. Many guests in the hostels will request rides on the notice board, or you may pass someone asking for a lift next to the road. If you have the space, this is the ideal circumstance to save some money on gas and make new friends.

    Saving money in Iceland

    Cramp Your Style

    Literally. Don’t come to Iceland with your big, almost empty, suitcase. The more space and flight restriction leeway you have, the more likely you are to fill it with all sorts of spur-of-the-moment purchases. By packing a backpack or smaller suitcase and filling it up, you’ll ensure that you don’t end up nearly bankrupt on things you don’t really need.

    Don’t Buy Bottled Water

    Not only will you look a little silly buying bottled water here on the island, but you’ll also be spending money unnecessarily. Iceland has incredibly high-quality water due to the glaciers here. Our tap water is probably much better than your bottled water could ever be. Just bring or buy yourself a water bottle and simply top up as you go. 

    Weigh Up Your Options & Spend Money on Once-in-a-lifetime Iceland Experiences

    When on holiday, it’s easy to throw caution to the wind. But it’s important to reign it in and only spend money on things that truly are once-in-a-lifetime and authentic Icelandic experiences. Going to eat pizza is something you can do back home, but you’re going to struggle to explore ice caves in New York or London.

    Limit Your Alcohol Consumption

    Whether it’s going out for cocktails or buying a bottle of wine – alcohol on the island is super expensive. You’re almost guaranteed to spend more money on your drinks than your meal. So, try to limit your alcohol consumption on the island and substitute it for soda, or even better, free water.

    traveling Iceland on a budget

    Get the Reykjavík City Card

    The odds of you spending some time in the capital city of Reykjavík on your trip is good. Whether it’s merely the launchpad to the rest of your Iceland adventure and your first stop after Keflavik Airport. Or whether you actually make it the base from which you do day outings.

    A Reykjavik City Card is an absolute must for anyone visiting the city, especially those traveling to Iceland on a budget. Although you’ll find plenty of things to do that won’t cost you an arm and a leg, such as Hallgrimskirkja or walking along the Old Harbor, certain attractions still charge entrance fees.

    With a Reykjavík City Card, you’ll get access to quite a few of these at no additional charge. These attractions include the Arbæjarsafn Open Air Museum, the National Museum of Iceland, and the Reykjavik Zoo.

    Traveling Iceland on a Budget is Easy if You Know How

    Planning the general/average cost of your trip to Iceland is easy once you have the numbers you need to work with. But, as you can see, even after creating your initial budget, it’s easy to start shaving off expenses and costs with the right know-how. Now you can travel Iceland on a budget and maybe even save enough to extend your stay. 

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