This article will take you through ten ways you can explore Iceland on a budget in 2021, plus eight iconic things to do in Iceland that are free!
Unless you’ve been living under a rock, you’ve heard about the beauty of Iceland. It has striking natural beauty and a rugged, dramatic landscape – it really is packed full of breathtaking sights!
And you’ve probably also heard that it is expensive to visit. So if you’re thinking about visiting, you need to know how to make your trip to Iceland low cost. After all, you don’t want to max out your credit cards or run out of money halfway through your trip!
How expensive is Iceland?
A lot of the northern European countries are expensive compared to the rest of the world – but, according to Numbeo’s Cost of Living Index, Iceland currently ranks as the fourth most expensive country in the world. And according to this report, staying in hotels is 10-32% more expensive in Reykjavík than in other Nordic capitals; prices of restaurants and lodging are more than the EU average by 44%.
My experience bears this out: I think Iceland is up there as probably the most expensive place I’ve visited (more than Denmark and Sweden). To give you a flavour, I couldn’t find a hotel room or an Airbnb in Vik for less than £300 when I went a couple of years ago in summer. And budget hotels with shared bathrooms were not less than £120 a night.
Is it worth it?
Yes, yes, a thousand times yes!
Iceland has one of the most spectacular landscapes in the world, in my opinion. The Land of Fire and Ice is well-named: it has the largest ice cap in Europe, with stunning glaciers, glacial lagoons and icebergs – plus, it sits on a diverging tectonic plate line, so it has tonnes of dramatic volcanoes, geysers and hot springs. In fact, there has been a volcano spewing molten lava into the landscape since March 2021!
But even though it is worth spending money on, there are ways to minimise the cost. Here are ten tips on how to visit Iceland on a budget.
1. Book a short stay
OK, let’s get this one out of the way.
The easiest way to avoid spending a lot in Iceland is to go for a short among of time. I’ve known people who went to Iceland for a few days only, and they loved it. There are plenty of day trips you can do from Reykjavík; the Golden Circle is one of them.
However, I don’t recommend a short stay – because there is so much to see in Iceland, far too much for 3-4 days only! I think you need a week there, minimum, and ideally more, because there is a lot of good stuff to see far from Reykjavik, in particular in South Iceland, but also in North Iceland and East Iceland.
So keep reading, because there are better ways to avoid breaking the bank on your Iceland trip…
2. Consider peak season (hear me out…)
It is important to think about what time of year to visit. So, when should you visit Iceland?
Now, the usual logic would be to go in the off-season because accommodation prices are cheaper. And that could be a very good option. October to April is the low season in Iceland – and the bonus is that you might see the Northern Lights, which are visible in dark skies. You’ll also see Iceland covered in snow, which looks very cool.
However, my recommendation is that you consider going in the summer season, which is peak. I know that sounds counter-intuitive for a blog about visiting Iceland on a budget, but bear with me…
Although prices might be higher in June, July and August, the days are so much longer. Some northern parts of Iceland have 24-hour daylight in June – and the rest of the country has close to that amount. What this means is you can explore for longer each day; you can see and do more during daylight hours. This makes it good value because you effectively get more Iceland for your bucks.
For example, on one day in Iceland on my trip in early June, I visited the Hallgrimskirkja cathedral in Reykjavík; picked up a rental car; toured the Golden Circle (including walking the faultline at Thingvellir, watching geysers erupt at Geysir, standing on the misty edge of Gullfoss waterfall and walking around Kerio crater); stopped in a doctor’s surgery in Selfoss for an hour (I thought I’d broken my thumb – but I hadn’t); checked into a hotel in Skógar, had dinner and also visited Skógafoss waterfall. This photo of Skógafoss was taken at 10:30 at night.
I would have been able to see less than half of these things during the small number of daylight hours in winter (I mean, I wouldn’t have wanted to do the doctor thing anyway, but you get my point).
Now, this doesn’t mean you have to cram a million things into every hour of daylight, but you definitely have more options to explore the beautiful island in the summer versus the winter, when you may only get 5 hours of daylight.
Overall, I think peak season actually works out great value.
3. Be flexible about when you fly
Iceland is served by flying routes from both Europe and North America, with Icelandair, Virgin Atlantic and British Airways offering regular direct flights to Reykjavík’s Keflavik airport. In addition, budget airlines Easyjet and Wizz also fly there from Europe.
I’d you’re planning Iceland on a budget, use a comparison site to find a good deal on prices for flights. If you’re flexible about which airline and what time you fly, you will get the best deals.
I like Skyscanner because it seems to have the most comprehensive coverage and Kayak for the way that it gives a prediction about whether prices will go up or down.
4. Shop around for car hire
There is a lot you can do by taking bus tours in Iceland – but you’ll have more freedom and flexibility if you hire a car and drive yourself around. And it is a wonderful country in which to drive. The landscape is so dramatic and also compact that you’ll see tonnes of beautiful scenery just from the roadside.
To get a good price on car hire:
- Shop around: There are lots of options that allow pick up from the airport or in Reykjavík, which could be a good option if you want to spend some time in Reykjavík before hitting the road (why pay for a car while you’re exploring a walkable city like Reykjavík?).
- Ensure you have a credit card: prices are better if you have a credit card as a guarantee (and there aren’t many options if you don’t have one).
- Go for a small car: outside of Reykjavík, most of the roads are single lane and fairly narrow, so you don’t want a big car anyway. My husband and I hired a tiny Peugeot 107 because it was cheap. It did look rather comical because my husband is 6’5”, but it was perfectly fine!
- Only hire for the days you need it: if you fancy a day or so in Reykjavík before or after hitting the road, use public transport those days and the airport shuttle – no need to have a hired car wasting money parked in the city.
- Book in advance: this is always good advice – and it is of course also true for other costs, like accommodation.
Guide To Iceland is a good place to start researching car prices.
5. Go basic on accommodation
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Accommodation is a big part of the cost involved in travelling anywhere. And for me, it is often the first thing I try to cut back if I need to reduce costs.
Some of the low-cost accommodation you could try if you’re visiting Iceland on a budget:
- Budget hotels
For my first trip to Iceland, my own choice for accommodation in Iceland was a mixture of Airbnb and budget hotels with shared bathrooms. I don’t love a shared bathroom, but it was worth it to be able to stay in Iceland for more days.
On my second trip in August 2021, I tried campervanning around Iceland, which did save me money. Although the van was more expensive to hire than a car, the cost of campsites was much less than other accommodation, and the combined cost of car hire + accommodation worked out less than if I had had a cheaper car and stayed in budget hotels.
I didn’t go for ‘proper’ camping or hostels. I’ll always trade a fancy room at night for some exciting adventure out in the country I’m visiting, but I’m not fond of camping in tents, especially in cold places (even in summer, Iceland will feel cold to most people!). And I disavowed hostels some years ago, after a particularly bad one in New Zealand (more on that another time, maybe…).
Try Booking.com for budget hotel options.
6. Plan your route with prices in mind
You will likely find that accommodation prices vary from place to place, and also according to how far in advance you are booking.
Therefore, if you’re exploring Iceland on a budget, you may need to plan your trip around where you can find a cheap place each night.
For example, for my dates, I found that outside of Reykjavík, Airbnb was more expensive than budget hotels, and inside Reykjavík, Airbnb studios were cheaper. So when I visited the Snæfellsnes peninsula, rather than staying there, I stayed in Reykjavík and made the journey around Snæfellsnes as a day trip from there.
Similarly, on my first trip, picturesque Vik in South Iceland seemed to be in demand for my dates and prices were high. So instead, I stayed in nearby Skógar and Hof, visiting Vik as I travelled in between the two, rather than staying overnight there.
Be prepared to flex your route a little to save some cash!
7. Minimise food costs
Eating in Iceland on a budget is definitely doable. Here are some options to save money on food:
- Self-cater if you can: If you have kitchen facilities in your Airbnb, hostel or campsite (and most campsites do), you can self-cater. Netto, Bonus and Kronan are the less expensive stores from which to buy food – but check their opening hours in advance, because they may not be open late in the evening. Avoid the more expensive 10-11 chain, and stores near tourist attractions, as they can be over-priced.
- Avoid restaurants: even if you can’t self-cater, you can eat cheaply, by avoiding restaurants, especially for evening meals. I found that service stations had surprisingly good selections of lunchtime options, including fresh sandwiches that were perfect for life on the road.
Oh, and drink the tap water! Iceland has amazingly clean water in the taps – so don’t waste money by buying bottled water. This will also avoid plastic, which is one of the ways you can be kind to Iceland.
8. Eight iconic free things to do in Iceland
There are so many things to do in Iceland on a budget. The spectacular landscape is what Iceland is all about – and much of that is easily accessible without paying entrance fees, once you have transportation sorted.
Here are some of my favourite FREE things to do in Iceland – all of which are Icelandic icons:
We’re told there are 10,000 waterfalls in Iceland, and there are loads you can see without needing a guide or a tour. My personal favourite is the majestic Skógafoss (pictured earlier), and I also really my brief visit to Foss a Síðu, which is situated right on the Ring Road.
You have to pay to hike on glaciers, to go into ice caves or to do boat rides on glacial lagoons, but it is free and easy to see many glaciers and lagoons themselves. If you go to only one, make it Jökulsárlón in South-East Iceland, where you can see the Breiðamerkurjökull glacier and the huge icebergs floating in its lagoon. And if you want a second one, nearby Fjallsárlón is smaller, but less busy and really serene.
Some of the most spectacular mountains in Iceland are easy to visit for free. For example, the iconic Kirkjufell, which featured in Game of Thrones, is right by the road just outside the town of Grundarfjorour in the Snæfellsnes peninsula. You have to be an expert climber to climb it though!
Black sand beaches
The most famous beaches are at Reynisfjara and Diamond Beach, but there are plenty of moody black beaches, especially in South Iceland – and they’re free to wander. Just give the surf a healthy distance, though: tourists are known to get caught by the waves and someone died a few years ago – so be careful!
The very instagrammable Sólheimasandur plane wreck is free to visit – though be warned, it is a long walk from the car park!
There are lots of picturesque churches in Iceland, including the Black Church at Búðir or the turf church at Hof. You may not be able to go inside, but you can explore wander around and admire them without paying anything.
Meet an Icelandic horse
Once you get on the road, you will see a lot of these tough little beauties in the fields, so just pull over and see if one will come to the fence to meet you.
See the Sun Voyager
This modern homage to Iceland’s Viking heritage is a lovely scenic spot in Reykjavík.
9. Choose your paid activities carefully
If you’re travelling to Iceland on a budget you may want to avoid paid trips and activities altogether. However, if you’ve saved money on transport and accommodation, you may be able to spend a bit on some activities – but you need to choose wisely!
One of the famous attractions in Iceland is the Blue Lagoon, an open-air hot pool surrounded by black rocks and filled with water heated by the earth.
The price of visiting the Blue Lagoon depends on the package you select and the time of day that you go and it is best to book in advance to guarantee a ticket at the times you want. On my visit, I chose the Comfort package, which is the ‘basic’ one, and the best price I could get was around £70 per person. Which I think is a lot for an hour or so in a hot pool.
Was it money well spent? Honestly, no. The water wasn’t hot enough to offset the chill in the air, the facilities were basic and the place was full of people taking selfies. With hindsight, I would have preferred to spend that money on another night In Iceland exploring the dramatic landscape.
By contrast with the Blue Lagoon, for a similar price, you could take a boat tour of the glacial lagoon at Jökulsárlón for around £65 per person (depending on the exchange rate). The Zodiac tours use small boats, which go fast to the snout of the glacier and can get really close to the huge, ancient icebergs – it is exhilarating and worth every penny!
10. Bring Your Own Booze
According to Numbeo, the cost of alcohol in Iceland 123% more expensive than elsewhere. Therefore, if you drink alcohol, you will want to stock up at the airport when you arrive in Iceland, and bring it with you on the road.
You will find the duty-free shop in the baggage claim area of Keflavík airport – and you have this one chance to stock up before you enter Iceland and get hit with seriously high bar prices. But if you’re travelling to Iceland during Covid, don’t linger here too long because there can be long queues to get out of the baggage hall.
Each person has an alcohol allowance of 6 units which could give you, for example, a bottle of spirits, a bottle of wine and a six-pack of beer.
I found it amusing how much the duty-free store is geared around alcohol – there is hardly anything else on sale there, just a few snacks and crates and crates of booze when I came through!
Final thought: Covid19
I hope these tips prove to you that it is possible to explore this wonderful country without breaking the bank. The only thing stopping you now is probably Covid19…
The good news is that Iceland is has done well in rolling out the vaccine and is accepting visitors. They have rules around vaccines, testing and quarantine, which they’re reviewing regularly and you can check their latest protocols here.
If you’re vaccinated or happy to do quarantine, maybe you can plan a trip there this year. I’m confident you’ll love the place as much as I do.