Iceland Currency: Guide to Money in the Land of Fire & Ice

What You Should Know About Iceland Currency

If you are planning your first trip to Iceland, you’re probably asking yourself a series of questions:

  • What is the currency in Reykjavik?
  • Do they accept credit cards?
  • Does Iceland use the euro?
  • Why are there periods in their numbers where commas should be?

Well, to unravel the mysteries surrounding Iceland currency, here are some quick tips to keep in mind.

Iceland is Expensive 

Iceland has developed a reputation for giving many traveler’s sticker-shock. The island is an expensive destination for those entering and for those living here. 

According to Iceland Magazine, you can expect to see prices around 66 percent higher than in the European market. 

It’s not uncommon to find a pre-made sandwich running around $10 after you’ve converted the Iceland currency to USD. If you decide to eat out, you can expect dinner for two to start around $100.

Travelers from America might also be surprised to be subjected to value-added tax, or VAT. The U.S. has individual state sales taxes, however, the average sales tax imposed is usually less than half of the average VAT. 

In particular, Iceland has a 24 percent VAT on goods and an 11 percent VAT on food. This may come as a shock to many Americans who, if they even pay food tax in their state, aren’t expecting to pay more than 2 percent.  

The prices in Iceland are also attributed to the economic strength of its currency, the high standard of living, and the sheer fact that most goods need to be imported. However, the beauty of Iceland is that if you’re a foreigner you can apply for a VAT refund and if shopping isn’t your goal, you can definitely take advantage of the natural wonders surrounding you. 

There are plenty of walking tours that you can take advantage of, and if you want to really experience the mystique of the island, you might consider taking a campervan into the wilds. 

Iceland Currency

So, what currency does Iceland use?

The currency that is used in Iceland is called the Icelandic króna (ISK). It has familial ties to its Nordic brethren, the Swedish, Norwegian, and Danish crown. While the international abbreviation is ISK, you’ll see it written as KR in many stores around the island. 

Do they accept euros in Iceland?

Most tourist spots will accept a variety of currencies, although, if you plan to convert Iceland currency to US dollars at a store, you can expect to pay a less than optimal exchange rate.

If you’ve planned ahead and converted your money to króna then you’ve probably walked away with some high-valued bills. In Iceland, bills are carried in 10.000 ISK, 5.000 ISK, 1.000 ISK, and 500 ISK denominations. 

American visitors should be aware that a period is used where in place of a comma. 

Credit Cards Are Accepted

In Iceland, credit cards are widely accepted as the country is nearly a cashless society. It’s not uncommon for many Icelanders to go months without needing to handle cash. For the majority of vendors, credit cards have become the preferred form of payment. 

Iceland’s credit cards use the chip-and-pin method, meaning for any purchase over 5.000 ISK, you’ll need to enter a 4-digit pin. If your card doesn’t have this feature, you’re still able to sign the credit card slip. 

Because of the fees passed onto the merchants, many will not accept American Express and Diner’s Club cards.

Shopping is Tax-Free

After you’ve spent some of your Iceland money, you want to make sure that you’ve kept your receipts. As a noncitizen of Iceland, you can apply for a VAT refund on any goods that cost more than 4.000 ISK (roughly $33) when you exit the country. 

Once you’re at the airport, you have to present your passport, the receipt that shows the purchase was made within the last three months, and a tax-free form provided and stamped by the store. 

Iceland also provides an opportunity to avoid VAT, which is through Duty-Free shopping at the arrivals terminal at Keflavík International Airport. 

Money-Saving Tips

As mentioned above, Keflavík International Airport is one of the few airports that have a Duty-Free coming into the country. If you’re over 20 years of age, you may want to consider purchasing alcohol coming into the country instead of shopping at specific liquor stores. 

In Iceland, you can also skip the bottled water, as the tap water is crisp and clean to drink. 

Finally, one of the best ways to save your currency in Iceland is to focus on spending most of your time in the weird and wonderful landscapes of this beautiful country. The views are priceless to behold.

Rent.is

You can experience the best way to see the country through Rent.is. We offer a range of Iceland camper rentals that fit any budget. Each one is equipped to explore the rugged beauty of Iceland. Book your trip today and explore our Iceland travel guide for more info!