How to tip and pay in Iceland – Ultimate Guide

Iceland is a very small country, with its own currency, which may complicate your plans for payment. Here in this ultimate guide, you will find all the answers to questions you may have on paying and tipping in Iceland.

First of all...

What currency is used in Iceland?

Iceland has its own currency which is called the Icelandic Krona. The currency is very high, and it is likely higher than your local currency. This on top of the fact that most things are more expensive than you may be used to makes Iceland one of the most expensive countries to visit.

Which is better, cash or card in Iceland?

Most shops in Iceland, no matter how small, accept debit and credit cards as payment. There is almost no need to bring cash on your trip to Iceland.

Some tour companies accept payment in cash only, but you can inquire about that before your arrival.

If you plan on visiting the market Kolaportið in downtown Reykjavík, some of the stalls do not accept cards, however, there is an ATM in the building so you do not have to bring cash with you and just take some out if needed. 

Why do you need to put a credit card or debit card on file when I rent a car in Iceland?

Many car rental companies in Iceland require you to leave an imprint of your card when you pick up the vehicle, even with all insurances added. This is done in case you receive any tickets or fines that go on unpaid. If the tickets are not paid for, the car rental company is charged for the ticket. It is always best, in case you receive any tickets or fines while on your rental, to pay for that yourself at the nearest bank as car rental companies often charge an additional service / Handling fee that can range from 20-50 EUR.

Banks in Iceland are open from 09:00 – 16:00 and you can usually find a bank in most towns.

Where can I get cash in Iceland if I do want it?

The only places you can get cash in Iceland are at the nearest bank or ATMs. The name on all banks in Iceland are Íslandsbanki, Arion Banki & Landsbankinn. As you maybe have noticed, Banki means a bank in Icelandic. 

What is the best place to exchange currency in Iceland? 

The only place to exchange currency in Iceland is at the bank. Some stores accept Euros and US dollars but do not take that for granted as some smaller boutiques and stores may not. The stores and hotels that do accept euros and dollars, however, set their exchange rate and you may sometimes end up paying more than you would in Icelandic krona.

What is the best currency to take to Iceland?

We would recommend having Icelandic krona with you if you plan on taking cash, as we said before, you may end up paying more when using euros or US dollars.    

What type of credit card can I use in Iceland?

Icelanders mostly use Mastercard, Maestro, and Visa, and they are widely accepted. AMEX & Diners were also accepted in most shops a few years ago, however, in recent years, the shops that accept them are always decreasing. The reason for that is the cost that the shop is charged for each transaction on these cards has gotten very high, making it impractical for shop owners to accept.

Can I use my credit card at a self-service fuel station in Iceland?

Yes, you can use a debit card at all self-service gas stations in Iceland. The only downside to using the self-service gas stations in Iceland, is that when you select the amount you would like to pump for, and you select „Fill tank“ it will automatically block the amount of 25.000 ISK (Approximately 195 USD) on your card. Then it may take some time for the excess amount to be released again to your card if you do not make use of the whole amount.  To avoid this issue, you can purchase gas cards for any amount you want, at any serviced gas station and use that to fill the tank at the self-serving stations.

Do you tip in Iceland?

It is not a custom to tip in Iceland. The workers are paid fairly for their work, and the service fee is always included in the price for the things and food you buy. If you receive excellent service, then you may of course tip the person as it is also not considered rude, however, it is not required or ever expected.

Can I rent a car in Iceland, using only a debit card?

Most car rentals in Iceland require a credit card on arrival for the rental. We here at Icerental 4x4 also require it, however, when adding either the Premium or Platinum insurance package, we accept a 16-digit debit card for the rental on arrival.