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In this post, we share our top savings tips for traveling in Iceland. Iceland is not exactly cheap to travel given its geography and limited resources. Food, gas and lodging costs can add up fast and blow up your budget. At the end of the article, we will give you an approximate budget for weeklong Iceland travels to work with.

Saving on Iceland Lodging

The first major cost on the list is lodging. Lodging is notoriously expensive in Iceland. Simple private rooms for two people in guest houses can cost you $200 or more depending on location. If you have plans to travel in busy summer months, expect to pay even more.

Related Content: Iceland Ring Road One-Week Itinerary

Lodging tends to be especially expensive in rural remote areas. These areas have a limited supply of housing and bountiful demand from foreign tourists. Though, things got better over the last 5 or so years. Icelanders have built more housing near remote landmarks to accommodate the influx of tourists.

Here is a quick example. Skaftafell is a popular nature reserve in southeast Iceland. It boasts glaciers, waterfalls and more. If we look at Airbnb accommodations, a simple cabin in that area can cost you more than $200 a night for two people in June.

There are several ways to address high lodging costs in Iceland for a tourist. The first obvious one is to book as early as you can. For instance, we were looking for accommodations in mid-March for our June ring road trip. We noticed that many affordable places were gone by then. That forced us to drive a bit longer than what we would have liked to.

So, if you can, plan at least 5-6 months ahead of your expected travel date. That way you will have less competition and many more affordable places available.

The other advice we have is to go with private rooms as opposed to entire places. Entire places like a cottage or an apartment are almost always more expensive. Sometimes, private rooms can be 30% to 50% cheaper keeping other things constant. That’s what we did. We booked private rooms throughout Iceland and saved a lot by doing so.

The other advice to save on lodging is to look for places outside of Airbnb and Booking.com. We noticed that many Icelandic guesthouses stay under the radar. They don’t advertise on big rental platforms to avoid fees. Their bookings are available either through email or their own website. You will have to search on Google to find those hidden gems.

Google is Our Friend for Saving on Iceland Lodging

Let me give you an example. We found this campground near Skaftafell in Svinafell. It charges around $48 per person for a guestroom that can accommodate two people. The catch is that you have to Google this place to find it.

Second, this guestroom offers something called sleeping bag accommodation. It is a bare minimum arrangement for a room that only comes along with a bed. You will need to bring your own sheets, pillows and such. In return, you get incredibly cheap accommodation for that location. You will need to email them your booking request. No advance payments are required. You can pay with a credit card after checking out.

And, I think there are many more places like that. But, you will need to do a bit more digging to discover them. If you do thorough planning ahead of time, budget around $120 to $150 per day for two people. So, a week-long lodging will cost you around $1,000. But, of course, going with hotels or entire places can easily double your lodging expense. It all depends on your preferences.

Saving on Iceland Car Rental

Let’s address another major cost, which is Iceland car rental. Car rentals can be very pricey. It’s especially true if you travel in summer when rental rates are some of the highest. Let me give you an example. We used Blue Car Rental on our week-long ring road trip. Booking a compact automatic vehicle for a week in May will cost you around $410 for a week. The same Toyota Yaris will cost you $544 in June. That’s more than 30% increase!

On top of it, you may have to start adding extras to your rental cost. Among these extras are gravel protection or ash and storm insurance. Doing so will make your car rental cost explode.

Saving with Blue Car Rental in Iceland

To save on Iceland car rental, here is what we did. As all foreign tourists, we landed in Keflavik International Airport. There are dozens of car rental companies there. When we looked into car rental, we wanted a reliable, but inexpensive option.

And that’s when we came across Blue Car Rental. Blue Car Rental has offices in Keflavik airport and Reykjavik. It offers one of the largest car rental fleets in Iceland.

The main benefits of booking with Blue Car Rental is price. Their quotes are less expensive, sometimes 20% lower compared to other rental companies. What’s more, their daily rates automatically include several important insurance types. Among them are super collision damage waiver, theft protection and gravel protection.

Gravel protection is especially valuable if you want to see certain remote landmarks. Blue Car Rental includes these insurances by default in its quotes. Conversely, many other major car rental companies charge extra fees for them.

If you choose to go with Blue Car Rental, use our link above to get 5% off your entire booking. No coupon codes required. The discount is applied automatically at checkout.

Also, booking around major holidays can save you money on car rentals in Iceland. For instance, Blue Car Rental provides discounts around Christmas, New Year and Thanksgiving. Discounts could be as high as 12%.

Saving on Car Gas in Iceland

The other related cost is gas. Gas is expensive in Iceland. There is no refining or extraction capacity on the island. Iceland satisfies 100% of its petroleum needs through imports. Current gas price in 2025 is $2.25/liter or $8.50/gallon. The US national average is about $3.10/gallon. That’s more than 2.5x more. Diesel is slightly more expensive at $2.40/liter or $9/gallon.

One way to save on gas is to rent a small compact car with better gas mileage. If you rent a compact car from Blue Car Rental, it has 4.2l per 100 kilometers. This is roughly 56 miles per gallon, which is very good. Although, it is doubtful you will get 56 miles/gallon given Iceland’s mountainous terrain. Still, renting a compact car could be a good idea, especially in summers. For winters, I would, of course, go with something steadier.

Another way to save on gas is to rent an electric vehicle. EVs are slightly more expensive to rent. But, you may save on charging your car. Iceland gets almost 100% of its electricity from renewable sources. Namely, 73% comes from hydropower, while 27% is from geothermal activity. But, surprisingly, its average electricity cost is around 15 to 16 euro cents per kwh. This is approximately the same as the US average.

The problem with renting EV is that charging can be an issue in remote areas. On top of it, driving in cold weather can reduce your driving range. So, yes, renting an EV could be an option to save on gas. But, I don’t know the extent of these savings and range anxiety that comes along with driving EVs.

Iceland Airfare Saving Tip: Icelandair Free Stopover

The other major cost of traveling to Iceland is airline tickets. Traveling from the US to Iceland can cost you $1200, if not more. One way to save on airline tickets is to combine your Iceland trip with travels in Europe. When you do so and fly by Icelandair, Icelandair offers a so-called free stopover. That way you can stay and explore Iceland for up to a week at no charge.

That’s what we did. We took advantage of this offer to explore Iceland ring road for 7 days. We have another very detailed video featuring our itinerary and more linked below. So, check it out.

But, there is one major drawback of this plan. You will have only 7 days. Doing an Iceland ring road trip in a week is doable. However, it will entail lots of driving every day. On top of it, you won’t be able to visit certain landmarks due to time constraints. This is something to keep in mind if you decide to go with Icelandair’s free stopover.

Saving on Food in Iceland

The other major cost when traveling in Iceland is food. Food is expensive, especially if you plan on dining out. True, Iceland is self-sustaining when it comes to fish and maybe lamb. In fact, fish is one of the largest export products of Iceland. But, as for everything else, the island must import it. It is true for fresh produce, fruit and vegetables.

Dining out at restaurants can balloon your travel cost fast. Here is a quick example. Suppose I want to buy pizza at Domino’s in Reykjavik. A small pepperoni pizza will cost me almost 2400 kronas. This is roughly $18 for a small-size pizza. Such prices are unheard of in the US. Looking at other restaurants, a similar picture emerges. Dining out in Iceland is pricey.

True, some tourists come to Iceland to try certain rare and traditional dishes. Among them are Svið, which is a sheep head dish, and hákarl, which is a fermented Greenland shark meat.

If you are on a budget, we would highly recommend cooking your own meals. That’s what we did. We shopped at large supermarkets as we drove through Iceland to save on food. Homemade meals like oatmeal with bananas or a sandwich can go a long way in saving you lots of money in Iceland.

Parking Fees in Iceland

Another unavoidable cost when traveling in Iceland is parking. And, that’s something you cannot do anything about. Almost all natural landmarks of Iceland are free to visit. But, certain national parks and popular waterfalls come with parking fees. Parking cost ranges anywhere from $5 to $10. I would budget at least $100 on parking and restrooms.

Packing Right for Iceland Road Trip

Also, planning ahead and knowing what to bring with you may also save you money. For instance, Iceland has lots of rain in summers. When we were there in mid-June, there was non-stop rain for several days.

We knew about it and brought special rain jackets or ponchos with us. Yes, you can bring an umbrella with you. But, given how strong winds are in Iceland, an umbrella is not an ideal option. Check out a reliable rain jacket poncho from Amazon to bring on your Iceland trip.

Another important item to take is world travel adapter if you visit Iceland from outside of Europe. This adapter kit has all necessary attachments and even fast charging ports for your phones.

Iceland One-Week Budget for 2 People

So, how much a couple traveling Iceland ring road for a week can expect to spend? Here is our take. From the US, I would budget $1,200 on airline tickets. Renting a car in June or July will cost you $550 with no extras. Add about $400 in gas cost. As for food, it depends. If you cook meals yourself, there is some chance you will spend around $400. But, it could be more.

Lodging is another wildcard. It could be anywhere from $800 or more. I would budget at least $150/day. So, let’s round it up and make it $1,000. As for parking and restrooms, it could be up to $100.

Of course, if you plan on taking whale watching or glacier tours, you will have to add more. These tours can cost you $150/person or more. For the sake of our example, I did not include them here.

If we tally all up, a one-week Iceland ring road trip for two will cost you roughly $3,600. But, it could be way more. It just depends on your preferences when it comes to food, lodging and rental car.