7 Tips for Saving Money on Your Iceland Trip (Comfortably)

An Iceland Guide: Part 2 

This is Part 2 of a series about planning your next trip to Iceland. For Part 1, click here.

While Iceland is certainly scenic and cheap to fly to, everything else is expensive! Whatever you pay for groceries or eating out here in Toronto - double or triple it and you’ll get the Iceland price.

Through asking our friends and co-workers, my friend and I were able to plan ahead to keep our total trip costs at ~$1,220 CAD per person (under $950 USD). If you're balking at our budget, keep in mind that:

• We rented our own car to have more freedom and flexibility in our schedule vs. taking a tour
• We visited the Blue Lagoon, which had an entry fee of around $125 CAD
• We didn't couchsurf, hitchhike, camp, or drink alcohol
• We shared a carry-on instead of purely living out of our backpacks

Without further ado, here are the tips we accumulated from our trip:

1. Pack light to avoid luggage fees

April 2019 Update: Sadly, WOW Air ceased all operations on March 28, 2019 and is no longer an option for cheap flights to Iceland. There are crowdfunding attempts to try and bring the budget airline back, but until then, stay tuned for potential deals offered by Air Canada once they start flying this route.

Typically, the cheapest flights to Iceland from North America are with WOW Air. If you're flexible about dates, you can get flights from Toronto or Montreal for as low as $260 CAD round trip (basic fare), or round trip flights from the U.S. for $199 USD. Ridiculously cheap, right?

...Or so it seems. The flight price only includes a “personal item” (42x32x25cm/ 17x13x10in) which is basically a large purse or backpack. If you want any sort of additional luggage, it's an additional $100-180. It's still cheap in the grand scheme of things, but the fees here and there definitely drive up the price significantly.

In the end, my friend and I shared a carry-on so that we could pack a few extra items, a total of $138 CAD round trip split between the two of us. We paid for it at check-in; it would have been slightly cheaper to pay for it upon initial booking.

However, it is entirely possible to pack for Iceland in just a backpack as long as you’re not fussy about wearing a different outfit every single day. Some general light packing tips are:

• Wear your bulkiest items on the plane, e.g. jackets, coats, sweaters, boots
• Limit the pairs of shoes you will take - bring one pair you can both hike and walk around in

For a sample packing list, see my post on what to pack for a summer trip to Iceland.

2. Stay at an AirBnB or hostel, not a hotel

I am usually not the biggest fan of AirBnB, but I would 100% stay at any of our AirBnBs again. Every single one was incredibly modern, recently renovated, absolutely spotless, and impressively soundproof despite the fact that we were usually sharing the guesthouse with a bunch of other AirBnB guests. All of them provided at least 2 towels to use and a bunch of other amenities that were extremely useful. I loved seeing kettles and hair dryers! Not to mention the shared kitchen was useful for cooking dinner.

You can save on more costs in the summer by camping, but you'd have to pack accordingly. Tents at Skogafoss were about $100-$150 per night cheaper than the hostels nearby.

If you're more into AirBnB, these were the ones we stayed at. I would highly recommend all of them:

• Ægisgata: Located in downtown Reykjavik, this house is within walking distance of everything you'd want to see in the city.
• Hrútafell Guesthouse: Located close to Skogafoss, this was good midpoint between Vik and Reykjavik.
• Efra-Sel Hostel: A family-run hostel close to Geysir and Gullfoss, this would be good starting point for your Golden Circle tour.

3. Choose the right rental car

It's fairly well known that cars with manual transmission are cheaper to rent than automatics. If you're willing to drive manual, this will definitely save some dollars. We weren't too confident in our ability to drive manual, so we opted for automatic.

However, we did get a Hyundai i10, which is a very small compact car. Smaller car = less gas. You can get away with this in summertime (although it limits access to areas such as Dyrholaey), but you will likely need a 4x4 in winter.

One of our home-made meals, thanks to Costco and bringing a few things on the plane.

4. Pack food in your luggage and cook your own food

It's a no-brainer that one of the best ways to save money on a trip is to prepare and cook your own food. Iceland is pretty relaxed when it comes to transporting food on the plane, other than when it comes to meat. Half of our carry-on luggage was filled with instant noodles, dried porridge, and dried fruits from Bulk Barn. These were great for breakfast, or when we were hungry in between sightseeing.

While you may think things like instant noodles are probably easy to get in Iceland - they are, but they were ~$3 minimum after the currency conversion vs. $1 maximum in Toronto. A restaurant meal in Iceland will likely run you upwards of $30, unless you're okay with eating hot dogs every day. We did 50/50 hot dogs and cooking our own meals.

5. Bring your Costco membership card

There are plenty of grocery stores you can go to, but there is a Costco about 15 minutes outside Reykjavik, on the way from the airport to the city. Any Costco membership card from North America will work here (my friend happened to have one). Groceries and gas are cheaper here than in other parts of Reykjavik.

You will also find the cheapest meal in Reykjavik here - $4 CAD for a hot dog and drink. We went back here twice just for the cheap hot dogs!

Of course, if you don't have a Costco membership card, then you can shop at any other grocery store in the city. The lamb hot dogs at Bæjarins Beztu Pylsur are only a few dollars more, though not as big as the ones you get at Costco.

There were two items specifically we got from Costco that fed the two of us for a good 2 days: $15 Costco chicken and a $45 sandwich platter (36 small sandwiches). We don’t have any dietary restrictions, so unfortunately you may have to look to other options if you are vegetarian or have gluten sensitivities.

Our meal at the Air France KLM Lounge before our flight.

6. Buy or eat your meal before you board the plane

Unfortunately, meals are not included in your WOW airfare in hopes that you buy one of their overpriced meals, I did see some people get their in-flight sandwiches and pizza, but they didn't look too happy eating it.

Thankfully, you can buy your own food and bring it on the plane. WOW Air flies out of Terminal 3 at Pearson Airport, though the restaurant selection is limited. We saw a lot of people bring chicken wings on the plane.

If you have lounge access, I strongly recommend arriving early and eating dinner at the lounge. Since I had lounge passes from my Scotiabank Passport Visa Infinite card, we went to the Air France KLM Lounge to have dinner (make sure to bring your Priority Pass membership card to get in; they won't let you in without one). My friend also had the foresight to fill up her water bottle before boarding the plane, so we avoided paying $3 for a small water bottle when we were thirsty.

7. Use credit cards without foreign transaction fees

The currency in Iceland is the Icelandic krona. Unfortunately, most credit cards will charge a 2.5% “foreign transaction” fee. If you’re not about that 2.5% surcharge life (I most certainly am not!), consider applying for one of the cards that explicitly waive the fee in Canada. I currently use the Scotia Passport Visa Infinite.

Most importantly, almost all of the cards above come with car rental collision / loss damage insurance as well, so you can decline insurance when you rent the car and save on those fees (~$30/day).

HOW IT ALL STACKED UP FOR US

*Cost after splitting between two people.

We could have squeezed our trip budget further by camping at Skogafoss one night, foregoing the carry-on, etc. but we were comfortable with what we planned given our full-time jobs. Keep in mind the Canadian dollar was also weak at this time, at about $1.30 : $1 USD.

Apart from all of the above, there are plenty of free or cheap attractions to check out while you're in Iceland. Check out this blog for suggestions.

Are there any other tips you have for lowering your trip budget in Iceland?