Iceland uses the Icelandic króna, not the euro, and you can get through most trips without touching cash. Here is how to pay, when cash helps and whether you should tip.
You land in Iceland with a wallet full of euros, ready to grab a coffee and a hot dog. The barista smiles politely, points at the card reader and waits. Ten days later, you fly home with those same euros still in your wallet, untouched. That is a fairly typical Icelandic trip.
Iceland uses the Icelandic króna (ISK), not the euro or the US dollar. But in practice, most visitors barely handle krónur at all, because Iceland is one of the most card-friendly countries in the world. You can pay by card or phone for almost everything, from hot dogs to highland bus tickets, and you do not need to tip.
What currency does Iceland use?
Iceland uses the Icelandic króna, written as ISK or kr. The plural is krónur. It is Iceland's own currency, managed by the Central Bank of Iceland, and it is not linked to the euro, even though Iceland is part of the European Economic Area.
Prices in shops, restaurants and on tour websites are shown in krónur and include value-added tax. Because the króna has a low value per unit, prices look large at first glance. A coffee might cost several hundred krónur and a restaurant dinner several thousand, so it takes a day or two to get used to the numbers.
Icelandic banknotes and coins
According to the Central Bank of Iceland, five banknotes and five coins are legal tender. The notes come in 500, 1,000, 2,000, 5,000 and 10,000 krónur, and the coins come in 1, 5, 10, 50 and 100 krónur. The 2,000-króna note is rarely seen, so you are unlikely to get one in change.
The coins feature sea creatures, including a lumpfish, dolphins, a shore crab and a capelin, a nod to the importance of fishing in Iceland's history. They make a fun souvenir even if you never need them to pay.
A short history of the króna
The króna has been Iceland's own currency since the early 20th century, when it separated from the Danish krone. In 1981, Iceland introduced a new króna worth 100 of the old ones, removing two zeros from every price after years of high inflation. The smallest unit, the eyrir (plural aurar), was taken out of circulation in 2003, which is why all prices today are in whole krónur.
The currency made headlines in 2008, when Iceland's banking collapse caused the króna to lose much of its value almost overnight. It has since stabilized, but it can still move noticeably against the dollar and euro, which is one reason prices for visitors seem to change from year to year.
Does Iceland use euros?
No. Iceland does not use the euro. A few hotels, tour companies and tourist-oriented shops may accept euros or US dollars, but you should not count on it, and the exchange rate you get is usually poor. Change will be given in krónur, if at all. The simplest approach is to pay by card in krónur.
Can you use US dollars in Iceland?
Generally, no. Like euros, US dollars are not accepted in most places. Bring a card instead, and if you want some cash, withdraw krónur from an ATM after you arrive.
Do you need cash in Iceland?
For most visitors, no. You can travel around Iceland for a week or two without using cash at all. Card payments are accepted almost everywhere, including small cafés, supermarkets, gas stations, swimming pools, museums and even remote farm guesthouses. Contactless payments and mobile wallets like Apple Pay and Google Pay are widely used.
There are a few situations where a small amount of cash can help:
Some remote campsites or rural honesty boxes, such as farm stands selling eggs or vegetables
Small donations at churches or nature sites, though many now take cards
Some public toilets in rural areas, though card readers are increasingly common
A backup in case your card does not work
If you want to carry a little cash for peace of mind, withdraw a small amount from an ATM in Reykjavík or at Keflavík Airport. There is no need to exchange money before you leave home.
Paying by card in Iceland
Visa and Mastercard are accepted almost everywhere in Iceland. American Express is accepted in many hotels and larger businesses but less widely in small shops and cafés, so bring a Visa or Mastercard as your main card.
Choose a card with no foreign transaction fees
Since you will use your card for almost everything, it pays to use one without foreign transaction fees. Fees of a few percent on every purchase add up quickly in an expensive country like Iceland. Let your bank know you are traveling if it requires notice, so your card is not blocked.
Always pay in krónur
When a card reader or ATM asks if you want to pay in krónur or your home currency, choose krónur. Paying in your home currency, known as dynamic currency conversion, usually comes with a worse exchange rate set by the merchant's provider. Let your own bank handle the conversion instead.
Know your PIN
Some card readers, especially at unattended gas pumps, ask for a four-digit PIN, even if you normally sign or tap at home. Make sure you know your card's PIN before you travel. If your card does not work at the pump, go inside the station during opening hours, or buy a prepaid fuel card in the station shop to use at the pump later.
What to do if your card is declined
Card problems are rare, but they happen. The most common causes are a bank blocking a foreign transaction, a card that needs a PIN the reader cannot process, or a magnetic-stripe-only card that a modern reader will not accept. Carry two cards from different networks if you can, such as a Visa and a Mastercard, and keep them in separate places.
If a payment fails, try tapping your phone instead, or ask whether the business can take the payment another way. Your bank's app is usually the quickest way to unblock a card, so make sure you can log in from abroad before you leave home.
ATMs and exchanging money
If you want cash, ATMs are the easiest way to get it. You will find them at Keflavík Airport, in Reykjavík and in most towns around the country. They are run by Icelandic banks, including Landsbankinn, Íslandsbanki and Arion Bank.
Check with your own bank about ATM fees before you go. Some banks charge a flat fee for every foreign withdrawal, so it can be better to take out a larger amount once rather than several small amounts. Exchange desks are available at the airport and some banks, but rates are usually better at ATMs.
How much do things cost in Iceland?
Iceland is one of the most expensive countries in the world to visit, and most prices are noticeably higher than in the US or mainland Europe. Eating out, alcohol and accommodation are the biggest costs. Supermarket groceries, especially from discount chains like Bónus and Krónan, help bring daily costs down.
Prices change, and the exchange rate moves, so check current rates with your bank or a currency converter shortly before your trip. A helpful habit is to roughly convert prices in your head when you arrive, so you know what a "normal" price looks like.
Alcohol is particularly expensive because of high taxes. Many bars run happy hours in the late afternoon and early evening, and duty-free shops at Keflavík Airport are a popular place to buy wine and spirits on arrival. A craft beer tour of Reykjavík is a fun way to sample local breweries with someone who knows where the good deals are.
Do you tip in Iceland?
No, tipping is not expected in Iceland. Service charges and fair wages are built into prices, so the amount on the menu or bill is what you pay. Icelanders do not tip in restaurants, cafés, bars or taxis, and nobody will think you are rude if you do not leave extra.
That said, tipping is not offensive. If a guide, driver or server has gone above and beyond, leaving a small tip is a kind gesture and will be appreciated. Some tour companies have tip jars, and some card readers offer a tip option, but there is no obligation to use them.
Do you tip tour guides in Iceland?
Tipping tour guides is not expected, but it has become more common with international visitors. If your guide made your day special, a small tip at the end of the tour is a nice gesture. It is entirely up to you, and many visitors simply leave a positive review instead.
Do you tip in restaurants in Iceland?
No. Tips are not expected in Icelandic restaurants, and the price includes service. You can round up the bill or leave a small amount for exceptional service, but it is not customary.
Tax-free shopping in Iceland
Visitors who live outside Iceland can claim back part of the value-added tax (VAT) on many purchases. According to Iceland's tax authority, Skatturinn, the minimum amount on a single receipt must be ISK 12,000, and the goods must be taken out of the country within three months of purchase.
Ask for a tax-free form when you pay at shops that offer it, and keep the receipt attached. At Keflavík Airport, claim your refund before you check in your luggage, because you may need to show the goods. The government's tax-free shopping guide explains where to go depending on the size of your refund.
Common tax-free purchases include Icelandic wool sweaters, outdoor clothing, design items and jewelry. Food, drinks and services such as tours and hotels are not eligible.
Money-saving tips for Iceland
Iceland is expensive, but a few habits make a real difference to your budget:
Shop at discount supermarkets for breakfast, lunch and snacks
Fill a reusable bottle with tap water, which is clean and cold everywhere
Take advantage of happy hours for drinks
Choose public swimming pools over premium lagoons on some days
Eat your main meal at lunchtime, when many restaurants offer cheaper menus
Book tours and rental cars well in advance for the best prices
Many Golden Circle day trips include a lunch stop rather than an expensive dinner, and a Golden Circle tour with a greenhouse lunch option lets you try the famous tomato soup at Friðheimar without driving.
For a cheap, local way to relax, a tour of Reykjavík's public pools shows you where Icelanders soak for a fraction of the price of a lagoon.
Paying for parking, fuel and tolls
Paid parking is becoming more common at popular nature sites like Þingvellir, Seljalandsfoss and Skaftafell. Payment is usually made by card at a machine or through a parking app, and cash is rarely accepted. In Reykjavík, street parking is paid through machines or apps in zones downtown.
Fuel is paid by card at the pump or inside the station. As mentioned above, have your PIN ready or buy a prepaid fuel card. There are no regular road tolls on the Ring Road, although the Vaðlaheiði tunnel near Akureyri charges a fee that is paid online.
Paying for tours and activities
Tours, lagoons and activities are almost always booked and paid online in advance by card, and many sell out in peak season. Once you arrive, you rarely need to pay for anything extra on the day, apart from optional lunches, drinks or souvenirs.
For evening entertainment in Reykjavík, indoor attractions like the Lava Show near the harbor can also be booked online, which makes them easy to slot into a rainy day without worrying about payment on arrival.
Frequently asked questions
What is the currency of Iceland called?
The currency of Iceland is the Icelandic króna, abbreviated as ISK or kr. The plural is krónur. It is issued by the Central Bank of Iceland.
Does Iceland use euros?
No. Iceland uses the króna, not the euro. A few tourist businesses may accept euros, but most places do not, and you will get a poor rate. Pay by card in krónur instead.
Do you need cash in Iceland?
Usually not. Cards and mobile payments are accepted almost everywhere, including small cafés and remote guesthouses. A small amount of cash can be useful as a backup or for rural honesty boxes.
Do you tip in Iceland?
No. Tipping is not expected anywhere in Iceland, because service is included in prices. You can leave a small tip for exceptional service, but it is not customary.
Can I use my credit card in Iceland?
Yes. Visa and Mastercard are accepted almost everywhere, and American Express is accepted in many larger businesses. Know your PIN, especially for unattended gas pumps.
Should I exchange money before going to Iceland?
There is no need. Most visitors pay by card, and if you want cash, ATMs at Keflavík Airport and in towns give you krónur at better rates than exchange desks.
Plan your trip around great food
Paying your way around Iceland is easy once you leave the cash at home and bring a card with no foreign transaction fees. If you want to understand what Icelanders actually eat, and what it costs, a Reykjavík food walk takes you through local favorites with a guide, from traditional dishes to modern Icelandic cooking.
