Money, tipping, and prices in Iceland
Iceland is one of the most expensive countries in the world and almost entirely cashless. Expect to pay $8 for a coffee, $14 for a beer, and $35 for a basic dinner. Tipping is not expected.
Icelandic krona banknotes and coins on a wooden table
Cards, cash and ATMs
Iceland runs on cards. Contactless works everywhere including public toilets, hot dog stands and gas pumps. Bring a card that does not charge foreign transaction fees — Visa and Mastercard both work; Amex is patchy.
You almost never need cash. If you do want some for tiny farm stops or tips, withdraw from Landsbankinn or Islandsbanki ATMs — they do not charge fees on top of your home bank.
What things actually cost
Rough menu: coffee $6-8, pint $13-15, pizza $28-35, lamb main $40-55, tasting menu $95-195. Supermarket meal from Bonus or Kronan costs $10-15. A litre of milk is $2.50, bread $4. Bottled water is a waste — tap water is glacier melt and better than most bottled brands.
Alcohol is punishingly taxed. Bring your duty-free allowance (1L spirits + 750ml wine + 3L beer). At Vinbudin state stores a bottle of decent wine starts at $20.
Tipping
Not expected. Restaurants include service; taxis, tour guides and hotel staff do not need tips. If service was outstanding, rounding up or adding 5-10% is welcomed but not assumed.
One exception: bar tabs. If you had a good conversation with the bartender, sliding a $5 note across is a nice gesture. That is it.
Frequently asked questions
What people ask before they set off on this one.
Practically no. Cards work everywhere including farm stalls. Bring a $50 in local notes as backup if you like.
Budget $150 per person per day, mid-range $250-350, high-end $500+. Excluding car and hotel.
No. Service is included. Nobody expects a tip and staff are salaried at Icelandic wage levels.
No, prices are in Icelandic krona locally. Your card converts automatically. Refuse dynamic currency conversion at terminals — always pay in krona.
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