10 Tips For A Cheap Iceland Holiday

A cheap Iceland holiday… Iceland on a budget – is this even possible? When you come back from holiday, people usually ask you how it was. However, when we came back from Iceland people asked ‘So how expensive IS Iceland?’

Whilst Iceland holidays can definitely be expensive, there are ways to visit Iceland on a budget without affecting the quality of your trip. Our 10 tips for a cheap Iceland holiday will help you save in one or more areas and bring the overall cost of your holiday down.

These tips could even help make your Iceland getaway one of the most budget-friendly trips you will take!

Before you go, make sure to grab an Iceland travel guide to help with your Iceland trip planning.

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1. Find the Cheapest Time to Visit Iceland

First and foremost, you should consider what you actually want to see and do in Iceland, and find out when is the best time of year for each activity.

Iceland is a year-round destination, but certain things are better at certain times of the year. For example, if seeing the Northern Lights in Iceland is something that you absolutely must do, then you should visit Iceland in winter. (Having said that, bear in mind that a sighting of the Northern Lights is never guaranteed!)

If you want to see puffins, you should visit Iceland in summer.  Travel to Iceland in the summer between June and August is generally more expensive than Iceland in the spring or winter. The time of year you go will affect a whole range of costs from flights to accommodation.

May and October in Iceland are great times to go when accommodation and flights are not too expensive, the days are not too short and you have a decent chance of seeing the Northern Lights (in October) and the puffins (in May).

watching northern lights in Iceland

Watching the Northern Lights in Iceland

2. Find Cheap Flights to Iceland

Did you know that it’s only a two and a half hour flight from the London airports to Iceland?  We didn’t know this and had assumed that it was much further, so were surprised to find out that the flight time is about the same as a flight from London to Rome. We were even more surprised to find that you can get very cheap flights to Iceland.

With Iceland being so close to the UK, you could even consider a weekend trip to Iceland. A short break to Iceland is a great way to see a little of the country to see if you’ll like it, although the chances are you’ll love it!

The main airlines that fly to Iceland from UK are Easyjet, WizzAir, British Airways and Iceland Air. Our favourite search site for finding and booking cheap flights is Skyscanner.

They have a great search facility where you can put in the whole month instead of specific dates and it will bring up flight prices on every day of that month. If you’re able to be flexible, you can choose the cheapest day to fly.

3. Find Cheap Accommodation in Iceland


Hotels in Iceland

Hotels in Iceland are notoriously expensive, and where you’ll probably spend the majority of your budget. You can save money by booking well in advance, but even then, they’re still quite pricey.

The trouble is, there aren’t a lot of cheap, family-friendly hotels in Iceland. One that we can highly recommend as being a good, mid-range hotel in Reykjavik is the Icelandair Hotel Natura Reykjavik. They had a great sized family room and their buffet breakfast was out of this world. Just what you need to set you up for a day of sightseeing. We spent two of our 6 nights Iceland trip here and highly rate it for families.

If you have a hotel in mind and don’t mind staying in the same hotel for the duration of your stay, you might want to consider Iceland holiday packages. Buying your hotel with your flight can offer great savings on your hotel as the hotel is subsidised by the airline.

Iceland Package Holidays

We’re not usually ones for a package holiday because we like the flexibility of hiring a car and moving around. If you don’t mind being based in the same hotel for the duration of your stay, it’s worth checking out Iceland package holidays on the new EasyjetHolidays site.

It’s no secret that there can be great savings if you book a package holiday, and Easyjet are offering competitive deals because they only recently started up. They fly to Iceland every day so you don’t have to stick to the 7 or 14 days of a traditional package holiday.

Self-Catering in Iceland

To reduce the cost of our accommodation in Iceland, we opted for self-catering accommodation for the rest of our stay. In true flashpacking style, we selected a mix of accommodation. The main criteria were budget and location, making sure that each one was conveniently located close to the sights we wanted to see.

We chose the Horgsland self-catering Cottages which was located between Vik and Hof and allowed us to do an easy day-trip to Jokarlsarlon Glacier Lagoon. It was a really cosy, 3-bedroom cabin, nestled next to a large mountain and looking out to sea.

It was quite remote and was a great place to watch the northern lights as there was minimal light pollution. There were also two large hot-tubs which, as we found out, are an essential part of an Iceland holiday.

We also stayed at The Garage which was located between Skogafoss and Sejelandsfoss waterfalls. It is a very stylish farm outbuilding conversion and the owners are super friendly.

They made a lovely chocolate cake for guests to have at check-in which was a lovely touch. We even had our own waterfall in the back garden! It was a little more than we planned to spend, but it was still cheaper than the other hotels around.

Cheap Iceland holidays at The Garage self-catering

The Garage in Iceland

4. Make your Own Food

One of the largest expenses of an Iceland break is eating out in restaurants. Icelandic restaurants can be incredibly expensive, although this is also subjective. Compared to other major cities like London, New York or Paris, the mid to high-end restaurants are moderately more expensive. The problem, again, is the lack of cheap eats which are abundant in other major cities.

One of the cheapest places we ate in was 101 Reykjavik Street Food because it came up in a search of cheap places to eat in Reykjavik.

If you are eating out and would like a drink first, look for restaurants that have a happy hour. We ate at the Latin-American restaurant Burro, which had some great cocktails on offer during happy hour.

The only solution to reducing your food bill in Iceland is to self-cater. This is another good reason to opt for self-catering accommodation. The supermarkets in Iceland are not expensive. We repeat. The supermarkets in Iceland are NOT EXPENSIVE.

They are almost on a par with the UK, except for perishables like fruit and fresh meat which are more expensive than the UK, but you can certainly save a lot of money by self-catering.

We also recommend taking some food with you from the UK in your luggage. We took some of the kids’ favourite snacks which are handy for long car journeys.

5. Shop in the Cheaper Supermarkets

There are a range of supermarkets in Iceland, just as there are in the UK, and some are cheaper than others. So food shopping in the right places will help you have a cheaper holiday in Iceland.

One thing to note is that, like petrol stations, supermarkets are not found in every town. You should be aware of where they’re located. You’ll have no trouble finding supermarkets in Reykjavik or Akureyri, but check here for a great guide on where you’ll find supermarkets in Iceland.

Here’s a list of the most well-known cheaper supermarkets in Iceland.




Just to be clear, 10-11 is the most expensive supermarket in Iceland.

6. Don’t Buy Bottled Water

The drinking water in Iceland is perfectly fine and if you are also of the school of thought that drinking water has a taste, then I would go as far as saying it’s delicious! We always take our refillable water bottles to avoid having to buy bottled water and it’s better for the environment so you can feel doubly good.

7. Buy Your Alcohol in Duty-Free at Keflavik Airport

Alcohol in Iceland is insanely expensive – whether you’re buying in a bar, restaurant or supermarket. There are bottle shops around the island, but your best option, if you want to enjoy a glass of something at your accommodation, is to buy what you need in duty-free at the airport after landing. You’re allowed to buy a bottle of spirits, a bottle of wine and a six-pack of beer.

We weren’t 100% sure of the prices in duty-free in Iceland, so we bought some in London duty-free before we left. You can do either, it just means extra to carry onto the flight if you buy it before. Either way, saving money on alcohol is definitely one way to help manage Iceland on a budget.

8. Hire a Car and Self-Drive

We usually hire a car wherever we go because we like the flexibility it gives us, especially with the kids. It’s also a much cheaper way to get around than booking tours to go everywhere or relying on taxis. You just need to make sure you read up on hiring a car in Iceland so you are prepared.

We drove to Jokulsarlon Glacier Lagoon and Diamond Beach near Hofn and to the Snaefellsnes Peninsula. Both of these tours from Reykjavik can be a long day out and expensive.

We hired a 4WD because we weren’t sure what the weather was going to be like at the end of October. The weather in Iceland can be very variable, but it was absolutely fine whilst we were there. The roads are excellent – especially the Ring Road – but during the Iceland winter it’s better to be safe than sorry, especially if you’re not used to driving in wintry conditions.

During the summer months, you are fine to hire a 2WD if you are sticking to the main roads. If you want to take any F-roads, you need a 4WD, even during an Iceland summer.

Rental car in Iceland

Keep the costs down with rental car in Iceland

9. Avoid the Blue Lagoon

The Blue Lagoon is one of the biggest tourist traps in Iceland. We were lucky to find out before we went that it’s not a natural hot spring at all, and is in fact heated by the off flow from a nearby power station.

This was not at all appealing to us, particularly as you have to pay EUR 55 for the privilege and it’s packed with hundreds of other tourists.

Visiting an Icelandic hot spring is one of the top things to do in Iceland so thankfully there are other hot springs that you can visit that are significantly cheaper. Some are even free, but might require a bit of a hike to get to.

Our favourite alternative was the Secret Lagoon which is on the Golden Circle, about 100 km from Reykjavik. It was about ISK 6000 (GBP 40) to get in for 2 adults. Kids under 14 are free.

We also loved visiting some of Iceland’s many municipal pools. You’ll find clean facilities and warm swimming pools with hot tubs galore. Everything is heated geothermally and they’re a very social place to hang out with locals. Our favourites were Laugardalslaug in Reykjavik and Hvolsvollur Sundlaugar. We paid £6 per adult and the kids were free – a great low-cost activity in Iceland.

10. Visit all the Free Sights in Iceland

One of the best things about Iceland is that all of its natural wonders are absolutely free to visit.  I can’t think of anywhere else where you can spend the entire day sightseeing without spending any money.

Whether you’re visiting the stunning Icelandic waterfalls (all free except for the parking at Seljalandsfoss), black sand beaches, Diamond Beach or the natural beauty of the Snaefellsness Pensinsula, there’s so much variety and so much that the whole family will enjoy – even if they do get a bit wet at the waterfalls!

You can also find some free things to do in Reykjavik.

Skogafoss Waterfall in Iceland

Skogafoss Waterfall in Iceland

We hope this article on how to have a cheap Iceland holiday has given you some food for thought and answered the most common question we get – ‘How Expensive is Iceland?’ Iceland is an incredible country, so don’t be put off by the rumour that it’s really expensive – it is very much possible to experience Iceland on a budget!

Like this? You might also like…

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Humpback whale
The Secret Lagoon Iceland
Skogafoss at sunrise
Sunrise at Diamond Beach Iceland
Gerðuberg cliffs in winter
16 replies
  1. Monica Sharma
    Monica Sharma says:

    Thank you for making our work so simple and easy, after this post I got a clear picture about planning a safe and budget-friendly holiday with my family, I will surely make my husband go through this post and maybe we can soon a plan a trip to Iceland as well with our family.

    • Jacs
      Jacs says:

      Thanks for your comment Monica. Please let me know if you have any questions about Iceland with your family. It really is a beautiful place to visit!

    • Jacs
      Jacs says:

      Thanks for your comment Ashley. I think people immediately think of the Blue Lagoon when they think of Iceland but I wanted to let people know that there are other cheaper and even better alternatives.

  2. Nicole
    Nicole says:

    These are some great tips! I have never visited Iceland before, but it is for sure on my bucket list. I will save this for when I finally do go. Thanks!

    • Jacs
      Jacs says:

      Thanks for your comment Nicole. I think Iceland has become a bucket list destination for so many people, but I often hear them say it’s too expensive. I just wanted to dispel that myth. I hope you get to go one day :)

  3. Carolyn
    Carolyn says:

    Absolutely wonderful post! I’ve always wanted to visit Iceland, but since it’s notoriously expensive, I’ve always put it off. These are some awesome tips…it looks like even someone like me can afford to go (I’m surprised to hear that groceries aren’t that expensive there! Great news!). Thanks for the great post.

    • Jacs
      Jacs says:

      Thanks for your comment Carolyn. The biggest surprise to us was the price of groceries too. We’d heard they were so expensive! I hope you get to visit one day!

  4. Herewomentell
    Herewomentell says:

    While Iceland is sometimes seen as a pricey destination, there are definitely ways to work around this in order to ensure you see the best the country has to offer, and still stick to your budget.


Trackbacks & Pingbacks

  1. What No One Told Us About Iceland | Global Debauchery says:

    […] do. Or at least try. There are some cheaper restaurant options in Reykjavik and other ways to do Iceland on a budget, but you have to be in the […]

  2. Free and Cheap Things to do in Reykjavik, Iceland says:

    […] Iceland’s capital city of Reykjavik is a 273 square kilometer of vibrant city vibes. As the northernmost capital of the world, Reykjavik has plenty to offer travelers. Unfortunately, Iceland is notorious for being expensive, but it doesn’t have to break the bank. We spent five days exploring Reykjavik and the surrounding area. While some of the things we did cost a pretty penny (the Blue Lagoon), there are plenty of fun things to do in Reykjavik. If your trip goes beyond Reykjavik, here are tips for Iceland on a budget. […]

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