What Currency Does Iceland Use?

If you’re planning a holiday to Iceland or your trip is coming up, money will always be a consideration. While it is part of the European Economic Area and, in fact, on the European continent, Iceland has not adopted the Euro. And despite its links to the United States, dollars won’t be of any use here either.

The Icelandic Krona (ISK) is the currency of Iceland, stemming from the Danish Krona from the years of Danish rule over Viking Iceland. 1 Krona is split up into 100 eyrir.

Let’s take a closer look at the Krona in Iceland.

What Currency Do I Need in Iceland?

If you are planning to take out cash to take to Iceland, or even exchange upon arrival, you’ll need to procure Icelandic Krona. This is the currency of Iceland and has been separate from the Danish Krona since 1918, despite keeping the same name. 

The Krona might be hard to get your head around due to the relative weakness of the currency compared to US Dollars, Great British Pounds and the EURO. While exchange rates in Iceland vary frequently, at the time of writing (February 2025) 1 Icelandic Krona equates to 0.0071 US Dollars. 

While this does mean that prices in Iceland are not as high as the numbers might denote, it’s important to consider that Iceland remains a fairly expensive travel destination. However, you can still find plenty of amazing free things to do. 

Are Any Other Currencies Accepted in Iceland?

Other than the Iceland Krona, locals will not accept any other cash. Even if you’re planning to stay for just a weekend or a few days in Reykjavik, make sure to pay your way in Iceland Krona. There are places to withdraw and exchange money around the capital and at Keflavik International Airport.

What Are the Denominations?

Icelandic Krona comes in both note and coin form. In terms of notes, there are 500, 1000, 2000, 5000, and even 10000 notes in circulation. Coins can be found to represent 1, 5, 10, 50, and 100 Icelandic Krona, in either silver (up to 10) or gold (50 and 100). But don't worry, if you’re not confident in recognizing the coins or notes, locals are more than happy to help when you’re paying for goods.

Can I Pay By Card in Iceland?

In this digital age, card payment and contactless methods are absolutely accepted in Iceland. In fact, you’re likely to find in a lot of places that cards are preferred to cash! It’s worth noting that, as in other countries, there is a limit on contactless payment. In Iceland, the current limit is ISK 7500 on singular transactions, which is around $50 USD. 

While card payment is popular, it’s recommended to carry a small amount of local currency with you in case you encounter an issue with your card in Iceland.

Are Credit Cards Accepted in Iceland?

Yes, you should be able to use credit cards issued in the US in Iceland.

Can I Withdraw Cash in Iceland?

If you haven’t managed to withdraw cash before landing, you can get cash out once you’re here. Keflavik International Airport will be your first stop, however, exchange rates here may be slightly increased. There are ATMs around the capital and at some roadside services for you to use too, with charges set by the machines and also by your card provider.

Best Places To Transfer Money in Reykjavik

Before you arrive in Iceland, you should check whether your bank at home has any partnerships with any banks that might reduce exchange rates and fees. It’s always best to avoid airports and hotels when exchanging money as these will be the most expensive places. Furthermore, it’s easy to spot a bad deal when you know what the current exchange rate is, so stay clued up! Looking at the capital, the following banks are the most convenient destinations for cash withdrawal and exchange:

• Landsbankinn - Branches all around Reykjavik and Iceland, find out whether a branch has a currency exchange ATM on the Landsbankinn website.
• Arion Banki - Closest branch to Reykjavik is in Kópavogur, currency exchange possible in any branch with a cashier.
• Western Union - Several branches around Reykjavik.

Note that only customers of Íslandsbanki can use their exchange and withdrawal services so this is not recommended to tourists.

Is Iceland An Expensive Destination?

While the exact numbers vary greatly depending on your precise plans, Iceland is famous for being an expensive place to visit - and to live in! Fuel, food, and even groceries are more expensive than you’d expect at home. Here’s what you can expect from a few basic purchases in the capital.

The high cost of food in Iceland means that visitors usually look for other ways to save while making the most of their trip. Renting a car can be a great way to visit Iceland on a budget.

*Prices accurate as of February 2025

Budgeting Tips for Iceland

Looking for some ways to cut corners and stretch your Krona as far as possible? Here are a few things to consider during your holiday:

• Don’t buy bottled water - Iceland’s tap water is some of the best in the world. Save your money and use a refillable bottle on your trip.
• Packed lunches - While the odd meal out is important to enjoy the local cuisine, day trips can be more affordable when you take a packed lunch to avoid more expensive cafes and restaurants.
• Public pools over popular spas - Enjoying this popular pastime in Iceland can be more affordable at public swimming pools over more expensive spots like the Blue Lagoon.
• Pack quality clothing - Save on panic purchases by packing properly at home. Check the weather as best you can and pack layers for every eventuality!
• Use ATMs wisely - Choose “local currency” when withdrawing from ATMs and paying by card at restaurants or shops for a fairer rate.

What Is a Customary Tip in Iceland?

If you are eating out or on tours around Iceland, you might be keen to know what a polite or average tip is. In actual fact, it’s not at all expected that you tip while in Iceland. However, if you think your service has been outstanding, a tip of around 10% on the original bill will be greatly appreciated. 

Now you’re all set to go! If you have any further questions about travel or budgeting in Iceland, our blog is a great place to explore. If you’re ready to go, why not book your rental car today?