How to Visit Iceland On A Budget In 2023

This article will take you through ten ways you can explore Iceland on a budget in 2023, 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 may to know how to have a cheap holiday to Iceland.  After all, you don’t want to max out your credit cards or run out of money halfway through your trip! 

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What Is The Cost To Travel To Iceland?

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 ranks as the eighth most expensive country in the world in 2023. 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 the summer.  And budget hotels with shared bathrooms were not less than £120 a night for my dates.

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.

10 Tips 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’d want a week there, minimum – and ideally more. There is just so much good stuff to see that is 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 of going to Iceland in winter 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 the peak season.  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. Iceland has close to 24-hour daylight in June and very long days in July and August also.  What this means is you can explore for longer each day: you can see and do more during daylight hours.  This makes summer great value because you effectively get more Iceland for your bucks.

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).

For example, on one day in Iceland on my first 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). This is why 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 26 airlines flying there. Icelandair, Delta Air Lines, British Airways and Play offer regular direct flights to Reykjavík’s Keflavik airport. In addition, budget airlines Easyjet and Wizz also fly there from Europe.

If 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 for finding flights 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 compact that you’ll see tonnes of beautiful scenery just from the roadside. Check out my guide and itinerary for driving the Ring Road In Iceland.

For budget car rental in Iceland:

• 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 lanes and fairly narrow, so you don’t want a big car anyway. On my first visit, 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.

Booking.com is a good place to start researching budget car rental in Iceland.

5. Go Basic On Accommodation

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 – I’d rather have more time in the place than have somewhere gorgeous to sleep.

Some of the low-cost accommodations you could try if you’re visiting Iceland on a budget:

• Camping
• Hostels
• Budget hotels
• Airbnb

For my first trip to Iceland, my 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 because the savings I made meant I was able to afford to stay in Iceland for more days.

On my second trip, 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. Overall, 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 (ie tents) or hostels. I’ll always trade a fancy room 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 and hostel 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, on my first trip, I found that was easier to find low-budget accommodation in Reykjavík than it was elsewhere in the country . 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, which saved me quite a lot.

Similarly, on my first trip, the picturesque town of Vik in South Iceland seemed to be in demand for my dates and prices were very high.  So instead, I stayed in nearby Skógar and Hof, visiting Vik as I travelled in between the two, rather than spending an expensive night 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 (I got majorly ripped off buying milk and a snack in a shop next to Goðafoss  waterfall!)
• 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!  It is well-known that 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:

Waterfalls

I’m 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.

Glaciers and Glacial Lagoons

You have to pay to hike on glaciers, go into ice caves or 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. Read more about how to experience the glacial lagoons of Iceland.

Mountains

Some of the most spectacular mountains in Iceland are easy to visit for free.  For example, the iconic Kirkjufell, which is 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 black sand beaches are Reynisfjara and Diamond Beach, but there are other 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 some have died – so be careful!

For more inspiration about black sand beaches, do check out my guide to the 9 most stunning and easy-to-reach black sand beaches in Iceland.

Plane Wreck

The very instagrammable Sólheimasandur plane wreck is free to visit – though be warned, it is a long walk from the car park!

Icelandic Churches

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. But don’t call them ponies – they’re definitely called horses!

See The Sun Voyager

This modern homage to Iceland’s Viking heritage is a lovely scenic spot in Reykjavík, and you can visit it on my free self-guided walking tour of Reykjavik.

9. Select 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 happy to spend a bit on some activities – but you need to choose wisely! I say this because in my experience, some are worth the price tag and some are not.

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. In hindsight, I would have preferred to spend that money on another night In Iceland exploring the dramatic landscape.

In 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 is 123% more expensive than elsewhere – it is so expensive in the bars and pubs! 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. 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! 

So, that’s how you can visit Iceland on a budget

I hope these tips prove to you that it is possible to explore this wonderful country without breaking the bank.  I’m confident you’ll love the place as much as I do.

Now, for more inspiration about what to do in Iceland, check out my itinerary for driving Iceland’s Ring Road in 7 days!

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