Iceland on a Budget: 20 Tips & Tricks to Travel Cheap in Iceland

Visiting Iceland on a budget can seem challenging at first, as Iceland has a reputation for being expensive. However, if you can be flexible and accept it won't be the most luxurious trip of your life, there are many ways to cut costs. If you’re longing to explore Iceland on a budget, here are twenty tips and tricks to save money as you make your dream trip a reality.

Visiting Iceland on a budget: save on Flights, Food & Accommodation

In a country like Iceland, the price tag can add up quickly. Saving money may seem like a challenging task but there are numerous ways to accomplish this goal. Let’s find out some tips to maximize savings for your next adventure in Iceland.

1. Don’t automatically choose the cheapest flight

Depending on where you live, some airports (and therefore certain airlines) will be more tempting than others. If you live close to a number of airports, don’t automatically choose the cheapest flight if you’re hoping to travel to Iceland for cheap. You might pay a little more to fly from your local airport, but it could be offset by the money you save in petrol or on public transport getting to and from home.

2. Consider flight times

The difference between the service provided by the low-cost and full-service airlines has decreased over time, particularly on short-haul routes. Where once you might have enjoyed an included meal, these days mostly you can expect to pay for any food or drink you consume on board. Increasingly who you fly with comes down not to service, but to the convenience of flight times and who has the lowest prices.

However, if you’re a frequent flyer and a member of a particular airline’s loyalty scheme, you may already have a preferred airline. This is likely to impact your choice of who you’re prepared to fly with as you can use the points you earn to discount your fare, making travel with a competitor more expensive.

3. Keep an eye on launch offers

Airlines come and go. You might have thought you saw the last of Wow, for instance, which shuttled to and from Reykjavik between 2012 and 2019. The brand has been resurrected by new owners and may carry passengers in the near future.

In the meantime, former Wow executives set up a new airline, called Play. The fledgling airline is off to a flying start connecting Keflavik to destinations in Europe and North America.

4. Examine what’s included in the ticket price

When you’re traveling to Iceland on a budget, it’s really important to consider all the costs of the flight and not just the headline price. Take a look at what’s included and see whether you need any of the extras. Different airlines have different policies – and they may have changed since the last time you flew – so read the small print carefully.

When it comes to those extras, the costs of flying can soon mount up. Luggage is the obvious element here: for a weekender in summer you might be able to get away with your carry on allowance, but for a longer trip when the weather’s likely to be cold, hold baggage is more likely to be a necessity rather than a luxury. Work out what it’s going to cost when you add on the bags you need to take and you’ll have a more realistic comparison.

Unless you’re traveling with small children, don’t worry too much about being seated away from your traveling companions. Priority boarding is another extra that can be ditched without compromising your journey – it’s still the same seat on the same plane, no matter when you start to sit on it.

5. Bring snacks on board with you to save money.

Instead of eating expensive plane food, you can enjoy a picnic lunch – visit a supermarket in Iceland on the way to the airport and you can do exactly the same on the return flight. Be mindful of the rules regarding liquids; as a general rule, anything you can spread won’t make it through security.

6. Sign up for email alerts

Airlines do from time to time offer seat sales, so it’s worth keeping an eye on when they generally offer such discounts. Receiving notifications of any fare deals and special offers before everyone else finds out gives you a chance to swoop in and grab the discounted fare before someone else does.

One particularly good deal to look out for if you live in – or are keen on visiting – North America is a stopover package with Icelandair. The airline offers transatlantic passengers the opportunity to spend between one and seven days in Iceland for the same fare that they’d be paying anyway between destinations such as London and New York. That gives you plenty of time to see Reykjavik and explore the most charming towns in Iceland.

7. Think about renting a car

Getting around can be expensive in Iceland. Unless you’re traveling solo, it can work out much cheaper (not to mention more convenient) to share a car rather than booking tours and excursions. Even long-distance buses aren’t cheap, and there’s no railway network.

Besides that, having your own rental car gives you the freedom to explore on your own terms. Still, if you won't want to break the bank while so, do check our tips to for renting a car in Iceland, it'll help you navigate throughout the process. And, of course, get a better price.

Within cities such as Reykjavík, however, there are plenty of buses; they’re reliable and affordable. Be clever with your itinerary, and you could save big by renting a car for only part of your trip rather than the whole time.

8. Don’t assume you need a 4x4

For trips on well-maintained routes such as Iceland’s famous Ring Road, you’ll do just fine in a 2WD car and it won’t cost you anywhere near as much to rent. Unless you’re expecting to do a lot of driving on gravel roads or are traveling in summer up to the Highlands, this is a good way to trim your costs.

9. Plan well in advance

As with flight bookings, if you hope to travel Iceland on a budget, planning how you’re going to get around Iceland well in advance gives you the pick of the deals. Hire cars in the cheapest category tend to sell out first, so the later you leave it to make your arrangements, the more likely it is that you’ll have to upgrade to the next class up, especially if you’re traveling in peak season when demand is high.

10. Travel off-peak season

The cost of renting a car varies with the seasons too, as fewer people wish to take a road trip during the Icelandic winter. Spring and autumn – to have the best of both worlds. Then, the costs are typically lower than in the height of summer, but the weather isn’t as much of a gamble as in the depths of winter.

11. Opt for a manual car

In countries such as the US, automatic cars are the norm, meaning many American drivers are daunted by the idea of driving what they call a “stick shift”. If you’re not one of them, capitalize on your skill by hiring a manual vehicle and save what can sometimes be a hefty premium.

12. Choose shared bathroom facilities

If you’re keen to staying in a guesthouse or any other types of hotels in Iceland, consider one that offers rooms with shared bathrooms. These tend to be considerably cheaper than those with ensuite facilities. If you’re concerned about sharing with strangers, you can reassure yourself about standards of hygiene and overall cleanliness by checking reliable reviews. In Iceland, the quality of accomodation tends to be high, and you shouldn’t have to compromise your standards.

13. Go camping

Another option for budget travelers is to consider camping. It’s a particularly attractive option in summer, when the weather’s more reliable and it’s more likely to be warm enough to be outside. Camping is a great way to immerse yourself in nature and of course, few places can beat Iceland when it comes to being in the great outdoors.

To gain the most benefit to your wallet, you’ll need to bring your own gear, including a tent, sleeping bag and towel. However, even if you factor in the cost of renting, camping is still a very affordable option. Be aware, however, that the rules governing wild camping were tightened up considerably in 2015; to pitch a tent you mostly need to be in a designated campsite or have the landowner’s permission.

14. Don’t choose downtown lodging

Another option for saving money on hotels, which is especially helpful in bigger places such as Reykjavík. When choosing a hotel in Reykjavík, it is better to stay outside the downtown area. With a rental car, you can stay on the edge of the city and still be able to visit centrally located attractions easily, as you'll be able to find free parking spots in Reykjavik.

Speaking of which, we also suggest choosing a place which offers free parking; make the most of it by walking where you can or study public transport routes so you can catch a bus after a night out.

15. Don’t rule out hostels

They are another excellent way of saving money and a bed in a dorm room offers excellent value for those hoping to travel Iceland on a budget. If you’re unsure about sharing with strangers – perhaps you’re a light sleeper or you’re a solo traveller concerned about safety – then consider a private room instead. They’re still excellent value but you’ll have your own space.

If you plan to hop from hostel to hostel, then consider investing in Hostelling International membership. HI Iceland has more than 20 hostels across the country, and at every one of them you’ll receive a discount of up to 10% off your booking. You can join in advance via the Hostelling International website, or when you arrive at your first hostel.

16. Take advantage of shared kitchen facilities

One of the biggest advantages of staying in any hostel is that they often have shared kitchen facilities. As you socialize with your fellow guests, you might make some new friends and cook together, which will save you money on the cost of eating out. If some of your fellow travelers are Icelandic holidaymakers, you’ll also gain a fascinating insight into traditional Icelandic food and local dishes.

17. Visit Iceland’s budget supermarkets

You don’t have to be self-catering to take advantage of Iceland’s budget supermarkets such as Bónus and Krónan. The money you save by ditching add-ons like hotel breakfasts can quickly mount up, as can switching out restaurant lunches for a picnic. Consider buying cold drinks rather than heading to a café, though remember Iceland’s pure water is free straight from the tap.

18. Embrace street food

If you’re in Iceland on a budget you’ll quickly learn that the food you purchase from food trucks and takeaway cabins can be as delicious as anything you’ll eat in Reykjavik's best restaurants.

In Reykjavik, grab a hotdog from Baejarins Beztu Pylsur; they famously once served Bill Clinton, Ben Stiller and Kim Kardashian. Across at Jökulsárlón, the fish and chip van and neighboring lobster cart do a roaring trade for good reason – the food’s delicious!

19. Eat at gas stations

On a chilly day, warming up with a bowl of kjötsúpa, Iceland’s famous lamb soup, is a real treat. Maybe you’ve worked up an appetite hiking or perhaps you just need something to keep you going during a long drive. One of the cheapest options for a hearty serving of soup is to call in to a gas station. Many have attached stores and food counters where you can refuel yourself as well as the car.

20. Cut down on alcohol

If you enjoy a tipple while on holiday, you’ll probably already know that alcohol in Iceland is not only expensive, it’s strictly regulated. Unlike in some countries, in the interests of promoting responsible attitudes to drinking, it’s not possible to head down to the local supermarket to pick up some bargain booze.

Instead, there are dedicated state-owned liquor stores. Buying alcohol in one of them works out cheaper than drinking in a bar. However, you can cut down on the cost of drinking alcohol even further by visiting the duty-free at the airport on your way in to Iceland.

A perfect budget-friendly trip!

As you can see, with a bit of thought, it’s easy to make travel to Iceland on a budget work without sacrificing the experiences you’ll have. Every little helps and you’ll be surprised how quickly the total you save adds up. Why not get started on your wallet-friendly trip and rent your car in Iceland with Cars Iceland?