Iceland in Winter: Money

When you read about traveling to Iceland, it is a common theme to read about how expensive it is to vacation in Iceland. While some of the costs in Iceland for our winter Iceland vacation did seem a bit high, the overall cost of the vacation seemed in line with some of the other vacations we've taken over a similar duration. This post talks about some of the expenses and other money issues we observed while in Iceland.

Currency

It can be a bit of a surprise that Iceland has its own currency (Króna, Íslenska Krónan, ISK) instead of the Euro. At the time of our trip to Iceland, the conversion rate between the United States dollar hovered around 125 ISK to $1 USD (and 138 ISK to 1 Euro).

When tours are purchased online in advance from Icelandic vendors, they are often purchased with Króna. This has some interesting implications. For example, two of our three canceled (due to weather conditions) planned excursions were purchased in Króna. They were refunded in Króna for the same amount upon cancellation, but the changing exchange rate (against the U.S. dollar) meant that we got back slightly different amounts back than we paid (a bit less for one and a bit more for the other). Likewise, while we booked hotel rooms well in advance for an agreed-upon price, the price was actually paid was a bit different at the hotels when we paid upon arrival because the exchange rate had changed slightly. The exchange rate between these currencies is not currently changing dramatically, so the difference in costs, payments, and refunds is often only a matter of a few dollars.

Credit Cards

Credit cards are very popular in Iceland. Using a credit card with no foreign transaction fee is the optimal way to purchase hotels, excursions, and other activities online before the trip and when in Iceland. We found Visa and Mastercard to be widely accepted in Iceland. Unlike our experience in central Europe, we found that the Icelandic vendors typically seemed to prefer credit cards over cash (for which they would have to make change). We worried that we'd need to recall our PINs for our chip-enabled credit cards and this was a worry because we almost never need to know the PINs in the United States. However, the only time we seemed to need a PIN was for purchasing diesel at the pump and paying at the pump. For other restaurants and shops, we did not need to use the PIN.

While in Iceland, we obviously used a credit card with no foreign transaction fees. However, it was important in a few of the pre-arranged tours to also use a credit card with no foreign transaction fees to make reservations online because the operator charged in Icelandic currency. We have a credit card that pays 4% back on travel charges but has a foreign transaction fee and another credit card that pays back 3% on travel charges but has no foreign transaction fee. We used the card paying 4% back for portions of the trip charged in American dollars (Gate 1 Travel deposit, New York City hotels, etc.) and used the card paying 3% back (but with no foreign transaction fee) for scheduling excursions and activities with Icelandic providers.

For more details, see Iceland Currency: All about Icelandic Money & A Currency Converter.

Food Prices

Dining out in Iceland can be costly. However, there are definitely reasonably priced options available. When you factor in that Iceland dining prices include compensation for the servers and others such that a tip is not generally necessary, the price of dining relative to other places can be not too different from some other popular vacation spots (such as Hawaii).

We stayed at the Fosshotel Reykjavik for four of our nights in Iceland and it is situated near Hlemmur Mathöll, which featured several food vendors across widely different cuisines and reasonably priced.

See my blog post of food in Iceland for more details on the food and associated prices.

Other Costs

We saved some money on our recent trip to Iceland because we went in winter. However, this also meant that we had other costs. For example, we purchased nicer coats than we normally use and gloves and waterproof hiking boots specifically for this trip. We'll use these in Colorado and in other areas we visit with weather conditions like Colorado and Iceland, but we purchased these specifically for winter in Iceland. See my previous post for more details on proper Iceland winter attire.

Our lodging costs in Iceland were high, but I've seen worse in expensive tourist areas such as San Francisco and deals can be found. Our cheapest per-night cost was likely at the Fossohotel Reykjavik, though I cannot know for sure the hotel cost because it was part of our overall Gate 1 Travel package that included flights. Our night at the Hilton Reykjavik Nordica was likely higher on a per-night basis and was priced just under $290 US for the single night. Our night at the Fosshotel Glacier Lagoon was a bit over $300 US, but it's the only game in town when you want close proximity to Jökulsárlón glacier lagoon. We liked all three of these lodging establishments in Iceland and I intend to write about them in more detail in a future post.

Excursions and tours can seem a bit pricey in Iceland, but these deals often don't seem so bad once you factor in the high prices of can rentals (specially with the highly recommended insurance) and the high costs of gasoline and diesel. We also added Wifi to our car rental; this was very handy, but added to the price of the rental. See my previous post for more details related to renting a vehicle and driving in Iceland.

Conclusion

Traveling to Iceland is generally more expensive than traveling to many locations, but there are deals to be had from time to time. In our case, the portion of the trip covered in the Gate 1 Travel package was overall less expensive than the part of the trip we arranged ourselves. We paid more for our personally arranged lodging and renting and driving a rental car and arranging our own tours was more expensive than our days on tours with Gate 1.