Iceland’s not cheap, but if you need to travel on a budget then there are plenty of ways you can cut costs without sacrificing your experience. From low-cost airport transfers to great value Gray Line tours, cheap eats and inexpensive accommodation, we’ll show you how to achieve an affordable vacation. With our practical tips on how to save money, visiting Iceland on a budget just got easier.

When’s The Best Time to Visit Iceland on a Budget?

If you’re trying to save money, then you’ll want to travel to Iceland outside the peak season months of June to August. Summer in Iceland can get expensive. However, it might surprise you that even late May or early September can offer considerably better value for money – and often similar weather. It’s a trade off, and only you can make that decision. Be sure you have a flexible road trip itinerary, whether you’re self-driving, taking tours, or mixing both.

You should save money on flights at this time of year too; though winter is cheapest some visitors get a little jittery about weather-related delays and cancellations. It’s a gamble, for sure, but this is when you’ll secure the cheapest fares and also accommodation rates; just be mindful of the level of your insurance cover in case of disruption.

Probably the most obvious way that budget travelers can cut costs regardless of when they come is to pare back the number of days in Iceland. This kind of packed itinerary doesn’t suit everyone, as the lack of downtime can be tiring. However, if you choose longer tours, such as those along the south coast, there’ll be the opportunity to have a power nap in between stops if you find you need it. Travel in the shoulder seasons when there’s still ample daylight to really cram it all in.

With thoughtfully considered and skillful itinerary planning, scheduling multiple tours and activities per day is easily doable; seek out south coast or Golden Circle combo options on Gray Line’s website where we’ll either incorporate a second activity into the basic tour or ensure you’re back in Reykjavik in good time to connect to one that departs later in the day.

What Type of Transfers Are Best For Your Budget?

Let’s start at the airport: there are a plethora of ways to transfer between Keflavik and downtown Reykjavik, but some are easier on the wallet than others. The cheapest way to get between the two is to hop on the #55 bus; though it picks up outside the arrivals hall it takes a relatively circuitous route to the capital which eats into the time you have for fun activities and sightseeing.

Instead, opt for the Flybus. This comfortable coach travels directly between the airport and Reykjavik’s BSI terminal. The journey takes around 45 minutes, shaving about half an hour off the public bus. At 3999 ISK for an adult single and 7298 ISK for a return ticket, the FlyBus is still far cheaper than a taxi and saves you the hassle of picking up a rental car and then finding somewhere in Reykjavik to park it.

It also offers the convenience of a shuttle bus add-on which delivers you closer to your accommodation. This adds a small amount to the price but the chance to be dropped off close to your hotel when you have luggage with you makes a lot of sense; even if you’re staying within walking distance of the BSI terminal this might still be preferable in wintry weather.

Within the capital, pack your comfiest sneakers and plan to walk as much as possible. Reykjavik is a compact city and so nowhere is very far from anywhere. An extensive city bus network is a bonus for longer trips. Further afield, Iceland’s relatively small permanent population doesn’t support frequent long-distance bus or coach services. Though you might be able to make such timetables work for your needs, taking a tour will give you more time at your destination and take away the potential stress arising from missed connections.

How to See the Icelandic Countryside on the Cheap

While budget travel is all about keeping the costs down, there’s little point in coming to Iceland if you aren’t going to spend at least one day in the countryside. Let’s take a look at some of the Gray Line tours you could be considering that are relatively inexpensive but represent excellent value for money. Last minute, booking tours in Iceland might even get you a discounted rate.

• Golden Circle Direct

If you only plan to spend one day outside the capital region, then the Golden Circle route is not only a microcosm of Icelandic scenery but doable on a budget. Opt for the express version of the tour; you’ll still get plenty of time at each of the three major stops to do them justice. Stroll through the Almannagjá Gorge at Þingvellir National Park, watch Strokkur erupt at Geysir Geothermal Area and be wowed by the power of Gullfoss waterfall – all for less than 9000 ISK per person. With no entrance fees on the day, it’s great value for money.

• Add on a geothermal lagoon

Iceland’s abundant geothermal energy means that it has made a name for itself with luxurious lagoons and spas. However, some are more affordable than others. Golden Circle and Secret Lagoon make a great pair; by tackling both in the same day you save on costly transfers. Similarly, add newcomer Reykjaböð Hot Springs in Hveragerði to a South Coast Wonders tour. Seeking out geothermal lagoons which are still building their reputation helps cut costs. For example, Laugarás Lagoon currently works out a little cheaper than Sky Lagoon or Blue Lagoon, yet it’s just as fancy.

• FlyOver Iceland 

If you’ve chosen to remain city-based for the duration of your stay, then get creative: did you know it’s possible to see the Icelandic countryside without leaving Reykjavik’s Old Harbor? FlyOver Iceland is a popular motion ride which transports guests, feet dangling, to some of the country’s top beauty spots. You’ll witness breathtaking glacier hikes, waterfalls, black sand beaches, canyons and volcanoes – all without leaving your seat. At less than 6000 ISK per ticket, it’s considerably cheaper than experiencing the real thing.

• You don’t have to miss out on the Northern Lights

Northern Lights tours can work out expensive if there’s a group of you (though excursions in bigger buses work out cheapest). Assess your expectations: if you could see a fainter display for free, would this be enough to satisfy you or are you unlikely to be happy unless you’ve seen the aurora borealis in all its intensity. If the former – and remember nothing’s a given where the Northern Lights are concerned – then consider sticking around in Reykjavik. Head out to a relatively dark spot siuch as Seltjarnarnes or even along the waterfront and face north; if you can escape the worst of the light pollution you’ll still see the colorful display.

• Don’t rule out city sightseeing

Within Reykjavik, seek out free activities and concentrate on sightseeing that won’t cost you a penny. For example, you might admire iconic Hallgrimskirkja church, whose design was inspired by the country’s basalt columns, or take a stroll along Sæbraut to admire sculptures such as the Sun Voyager and landmark architecture like Harpa, the city’s waterfront concert hall. It costs nothing to window shop on Laugavegur or to grab a selfie on colorful Skólavörðustígur (Rainbow Street). Consider using the Hop On, Hop Off bus to save time.

What Kind of Accommodation Suits a Cost-Conscious Traveler?

Even travelers on the tightest of budgets can find somewhere affordable to stay within the capital region. The concentration of population here means Reykjavik is where you’ll find the most choice, and therefore accommodation spanning a wider range of price points. Finding accommodation in the Icelandic capital isn’t hard and you’ll achieve the biggest savings if you book well in advance. Travelling in the shoulder seasons of spring and autumn – or even braving the winter weather – can help you cut costs as rack rates soar from June to August. If you’re tempted by a last minute trip to Iceland, it’s worth scoping out available accommodation before making firm plans.

• Camping

Reykjavik is a compact capital with an extensive city bus network, so camping isn’t as impractical as you might first think. You could pitch your tent within a couple of kilometres of downtown, walkable to the city center – or an easy bus ride. Take Reykjavik Eco Campsite, for instance: it offers tent pitches for less than 4000 ISK per night and is also on the Gray Line tour pick up route.

• Hostels

Once the preserve of youngsters, savvy travelers with a bit more life experience are also well versed in the advantages of hostel stays. For the cheapest prices, you’ll need to commit to staying in a dorm – usually a larger one – but securing exclusive use of smaller dorms can work well for groups of friends or families, while private rooms might prove cost-effective for couples.

• Apartments

While apartments aren’t the cheapest accommodation option, they do have a big advantage: cooking facilities. Having your own kitchen – even if it’s little more than a microwave and coffee maker – means you can save big on breakfasts, prep a lunch to take with you and dine in after a day out. Look for an apartment further from downtown Reykjavik as these tend to give you more bang for your buck.

• Guesthouses

Finally don’t rule out a guesthouse if you’re looking for accommodation that doesn’t cost the earth. Choosing a room with a shared bathroom tends to be much cheaper; in a small guesthouse it’s likely to be no further than across the hall. Don’t rule out suburban locations such as Seltjarnarnes if you’re trying to make your money stretch as far as possible.

Good Food Doesn’t Have to Cost a Fortune

It doesn’t have to cost a fortune to eat well in Iceland, as you’ll soon find. If you’ve chosen to stay in a hotel or guesthouse, try to find one that includes breakfast in the price if the room. Buffets are generous and varied; you can fill up so that you won’t be hungry until dinner time. For dinner, consider takeout, fast food or dine at one of Reykjavik’s popular food halls.

• Cooking for yourself

Renting a self-catering apartment is a tried and tested method of saving money on vacation and Iceland’s no different. City center branches of affordable grocery stores such as Bónus and Krónan are ideal if you’re hoping to cut down on the cost of food, but actually, eating out doesn’t have to be as expensive as you think.

• Sample Iceland’s delicious hot dogs

Fast food can be a visitor attraction in itself, and that’s definitely the case with the Icelandic hot dog. This popular snack is unusual in that it blends pork and beef with free-range, grass-fed lamb, giving it a unique and delicious flavor. Seek out iconic stands such as Bæjarins Beztu Pylsur, which in the past has served celebrity clients such as Bill Clinton and Kim Kardashian.

• Iceland’s iconic dishes are filling as well as tasty

 Iceland’s climate means that many of its most iconic dishes are hearty fare. For instance, tuck into a bowl of traditional lamb soup. It is easy to find; even at gas stations if you’re out for the day. Another filling option is plokkfiskur, a tasty combo of flaked white fish (usually cod or haddock), mashed potato and béchamel sauce.

• Consider cutting back on alcohol

Alcoholic drinks are expensive in Iceland and so you will spend big if you’re a heavy drinker. Unlike in some other European countries, you can’t buy alcohol in Icelandic supermarkets. Vínbúðin is the only retail store licensed to sell booze and even that’s not cheap. If it really isn’t a holiday without a G&T, consider buying some duty free on your way into Iceland to save money.

• Think outside the box when it comes to places to eat

If your tour stops at a petrol station for a rest break, we’ll remind you that some of these in Iceland serve food. Two of the most popular items – and quintessentially Icelandic to boot – are hot dogs and lamb soup. Tasty and filling, they’ll definitely keep hunger pangs at bay. Use the opportunity to refill your water bottle; Icelandic water is pure and safe to drink.

• Embrace food trucks and BYO lunches

Bring a packed lunch out on full-day tours. Though Gray Line’s tours are planned so that you will find restaurants and cafés at some stops, you can save money if you bring your own food and have a picnic. Food trucks are also parked up at some sites – such as those serving visitors who’ve come to Jökulsárlón Glacier Lagoon and Diamond Beach – and these typically offer cheap but delicious meals and snacks such as fish and chips.

By following these money-saving tips and choosing wisely from Gray Line’s wide range of great value tours, we’re sure you’ll be able to pull off traveling to Iceland on a budget. Challenge accepted?

To Sum Up...

Iceland’s not cheap, but budget travelers can easily cut costs. From low-cost airport transfers to great value Gray Line tours, cheap eats and inexpensive accommodation, we’ll show you how to achieve an affordable vacation.