If you're planning a trip to Iceland, one of the first things you'll need to understand is the local currency. Iceland has become one of Europe's most popular travel destinations thanks to its dramatic landscapes, geothermal lagoons, waterfalls and unique scenery. Despite its location in Europe, Iceland does not use the euro.
Understanding what currency Iceland uses, how payments work and whether you need cash will help you prepare for your trip and avoid unnecessary exchange fees once you arrive.
What Is the Official Currency of Iceland?
Iceland uses the Icelandic króna as its official currency.
The currency code is ISK, and prices are usually shown with the abbreviation kr. One króna is technically divided into 100 aurar, although aurar are no longer used in everyday transactions.
Banknotes are available in denominations such as 500, 1,000, 2,000, 5,000 and 10,000 krónur. Coins are still in circulation, but many visitors barely use them due to the popularity of card payments.
The value of the Icelandic króna differs significantly from the pound, so don't be surprised if prices appear as large numbers at first. After a few days, most travellers become familiar with the conversions.
Does Iceland Use the Euro?
No. Iceland uses the Icelandic króna rather than the euro.
Although Iceland is part of the European Economic Area and has close ties with Europe, it has retained its own currency.
You may occasionally see prices displayed in euros in some tourist focused businesses, but everyday transactions are conducted in Icelandic krónur.
Can You Use Euros or Pounds in Iceland?
Generally, no.
Hotels, restaurants, attractions and shops expect payment in Icelandic krónur. Foreign currencies such as pounds and euros are not commonly accepted.
Even if a business is willing to take euros, the exchange rate is unlikely to be favourable.
Using the local currency will almost always give you better value.
Paying by Card in Iceland
Iceland is one of the most card friendly countries in the world.
Card payments are accepted almost everywhere, including cafés, restaurants, petrol stations, supermarkets and tourist attractions. Contactless payments are extremely common, and mobile payment systems are widely supported.
Cash is still worth carrying to be safe, especially if you’re travelling away from the main populated areas.
Using Cash in Iceland
Carrying a small amount of cash as a backup can provide peace of mind, particularly if you're travelling into remote areas.
Converting some cash before you go will allow you to get the best rates and ensure you’re all set if card payment isn’t available somewhere. Travel Cash stores allow you to change your Icelandic money back into GBP at a great rate, so you won’t lose out if you don’t spend it all.
Tipping in Iceland
Tipping is not expected in Iceland.
Service charges are already included in prices, and workers receive fair wages. Unlike in some countries, there is no strong tipping culture.
If you receive exceptional service, you're welcome to leave a small tip, but there is no expectation to do so.
Many visitors do not tip at all during their stay.
Everyday Costs in Iceland
One thing travellers quickly notice is that Iceland can be expensive.
Accommodation, restaurant meals and alcohol are often considerably more expensive than in the UK. Even everyday items such as coffee and snacks can cost more than you might expect.
However, many of Iceland's most famous attractions are natural landscapes that can be enjoyed at little or no cost. Waterfalls, beaches, volcanic scenery and hiking trails are often free to visit.
Planning your food and accommodation budget carefully can help manage overall costs.
Paying for Transport
Public transport in Iceland is relatively limited compared to many European countries, but card payments are widely accepted wherever transport services operate.
Fuel stations throughout the country typically accept card payments, including many self service stations.
Practical Money Tips for Visiting Iceland
Use a debit or credit card for most purchases with cash as a backup.
Choose to pay in Icelandic krónur rather than pounds if given the option.
Carry a backup card in case your primary card stops working.
Check your bank's foreign transaction fees before travelling, and lean more heavily on cash if this works out cheaper.
Is Iceland Expensive for UK Travellers?
Iceland is often considered one of the more expensive destinations in Europe.
Accommodation, dining out and entertainment can all be costly compared to the UK. However, many travellers feel the country's unique landscapes and experiences justify the expense.
Travelling outside peak season, booking accommodation in advance and shopping in supermarkets rather than eating every meal in restaurants can help reduce costs.
Iceland uses the Icelandic króna as its official currency and does not use the euro. Card payments are accepted almost everywhere, but not quite.
Cash is occasionally needed, tipping is generally not expected and managing money is straightforward for visitors. With a suitable debit card and a basic understanding of the currency, you'll be well prepared to enjoy everything Iceland has to offer.
