Travel Tips To Save Money In Expensive Iceland

If you don’t know this yet, Iceland is a very expensive country to travel in. Here you will find 10 Iceland Budget Travel Tips to help you navigate your way through this awesome country in a cost efficient manner. The land of fire and ice will enthral you with its picturesque landscapes and fill you with a memorable road trip. But it is also a very expensive place to travel when it comes to food, gas/petrol and accommodation. I think I’ve just spelled out all three essentials a traveller would face.

Why Get Iceland Budget Travel Tips From A Singaporean?

my Iceland budget travel tips

Because Singaporeans are best known for getting the best deals. Yes we are very resourceful in searching for the best deals and offers. Not all of us are but most savvy travellers from Singapore tend to be. I visited Iceland in September 2016 and spent probably six to eight months planning for it. We bought our air tickets nine months in advance. Coming back from that trip, I am armed with a clear picture of my travels in Iceland and I hope to share with you my Iceland budget travel tips so you can save money learning from my experience.

Iceland Budget Travel Tip #1: Car Rental Company

I did extensive research on this simply because I have been plagued by horror stories of unscrupulous car rental companies that charge you for minor scratches or dents. Sometimes you only get charged months after you return home. Since then, I always opt for maximum coverage of car insurance when renting. I like to play it safe on such things.

I shortlisted two companies that offered decent coverage at a reasonable price on their car insurance and have automatic diesel cars as an option for hire. Why diesel? Because it is cheaper than petrol. Every cent counts for the kind of mileage you will clock when you do a road trip in Iceland. Car rentals are not cheap either but what other choice do you have? Iceland is a place you would like to go around by car to explore, not sit in a tour bus if you can help it.

We are also “tropical” drivers so we do not have experience driving in snow and deliberately picked September for our trip. This also meant we did not need a four wheel drive since that would add up to the cost, and take in even more petrol. My shortlist was between Thrifty and Blue Car Rental.

Thrifty is a well known brand and they offered a very reasonable price inclusive of all the super collision waivers. The downside to it was their reviews weren’t great and they couldn’t guarantee me an automatic diesel car for my group of 4. I was also not assured of a new car – you wouldn’t want your car to break down halfway! Their customer service was also slow in replying my emails. I just did not feel very confident about Thrifty so I went with Blue Car Rental.

Kia Ceed - Blue Car
Our fairly new Kia C’eed from Blue Car Rental

Blue Car Rental is one of the top recommended car rentals in Iceland. When it comes to Iceland budget travel, car rental prices are key to how much you can save. Blue Car Rental offers a very competitive price which comes with all the insurance you will need so you don’t even need to buy extra. They were also not the kind who would nitpick minor scratches or small dents caused by gravel while driving since gravel protection was included. The sand and ash protection was sold separately and quite pricey. Despite my paranoia, we did not buy it. Why? Read Tip #2 after this.

Blue Car’s email response was speedy and friendly. They were able to assure me of a new car and had a good size automatic diesel for my group. They were also seemingly flexible about paying an upfront rental deposit so I managed to secure a car with just my credit card details.

At the Kevflavik office, their staff didn’t seem very happy working there. Business was booming and we had to wait before our names were called. They were clearly doing well and a very popular choice. But service at the rental counter was not as chirpy as you would hope for. What’s important was that we got a new Kia Cee’d automatic diesel that came with a GPS system that we didn’t order or pay for.

Driving in Iceland
Chris’ first 10 minutes driving out from Blue Car Rental’s office – getting used to driving on the left side.

Iceland Budget Travel Tip #2: Rental Car Insurance

The paranoia in me refused to go without an excess coverage that protected me from the very expensive self risk as well as any sand and ash damage. According to Blue Car Rental’s website, the maximum self risk amount is ISK 90.000 for all 2wd cars and ISK 120.000 for all 4wd cars and larger passenger cars.

I found Worldwide Insure and calculated the cost of buying this excess coverage so I could have a piece of mind. At only less than GBP60, I was able to get coverage. I was blessed to never make a claim so I cannot vouch for its claims process but I knew I was covered for everything including the cost of tyre replacement if I encountered a flat tyre. Sadly, I just discovered that they no longer offer this to residents outside of UK.

I wrote in to enquire why and they said that they were in the midst of updating this with a new underwriter. So do check out their website to see if this has changed. Keep me posted so I can update my post once they open it up to other countries.

Iceland Budget Travel Tip #3: Best Options for Petrol / Gas

I know there is plenty of talk about this topic, especially when most of us do a road trip in Iceland to explore their awesome landscape. Generally petrol prices do not differ much. But nearing the end of our trip, I discovered that Orkan was my favourite of them all. Why? Because their petrol card offers you flexibility of putting in whatever amount you like. You are not stuck with a fixed value card (like what N1 offers) and the card is reusable which is more sustainable than N1’s “use and throw” petrol cards.

If Americans have their burger fix on a road trip; Icelanders have their hot dog fix on a road trip. As you already know, hot dogs at the petrol stations are a common treat for the road. They are the cheapest hot food (~ISK 350 / SGD4.50) you can get in Iceland. One hot dog is never enough so you’ll end up buying two. According to Conde Naste, the hot dogs’ unique taste come from their free range organic lamb mixed with some pork and beef since Iceland doesn’t allow the import of any live animals.

The prices are more or less the same but I stumbled into one Orkan station that offered the perfect value meal of 2 hot dogs and a drink and the price was the lowest compared to N1 and Olis. I vaguely recall the drink price being very cheap (or free) when you buy the two hot dog set. But Orkan does not serve those delectable fried onions that N1 does and lack the variety of sauces offered at N1. So do try at different petrol stations and compare it yourself.

Icelandic Hot Dogs

Your car rental may sometimes come with a discount petrol card. Our Blue Car rental came with a Olis discount card which we happily used until I realised their prices were inflated so as to include the discount. Olis’ prices were slightly higher than the other stations. But their card offered free (bad) coffee and discount on food at their diner. Their diner actually offers pretty affordable hot meals and burgers that you can consider for an affordable dinner in Iceland.

But because your preferred petrol stations are not always available, it is good to buy an N1 petrol card to stand by since N1 has the most petrol stations in Iceland. The petrol card is only needed if you do not wish to meddle with their automatic gas stations’ credit card payment facility which involves a PIN to work. We survived our trip entirely without using credit card PINs.

Iceland Budget Travel Tip #4: Book Your Accommodations Early

We booked our accommodations as early as 8-9 months ahead and never regretted it. They were a mix of cottages and cheap hotels; most came with ensuite bathroom. We found some on AirBnb but most on hotel booking sites like booking.com and hotels.com.

Lake Thingvellir Cottage
We rented 1 of only 4 cottages here – 2 rooms + a small kitchen. Beautiful glass windows and a view of Lake Thingvellir

I also discovered that many AirBnb options were available outside of Airbnb when you google them. The owners actually place their units on AirBnb but also have their own direct websites to take in bookings. So if you like something you saw on AirBnb, try to google to see if you can find the same one on its own website. The clue is to look for the name of the rental as they usually use the same name. This saved us from having to pay upfront through an AirBnb booking. One even took our reservation by trust/email without credit card details!

TIP: Search the AirBnb apartments you like on Google to see if the owners have a website of their own to take in direct bookings so you save on paying upfront through AirBnb

When you opt for Iceland budget travel, pick accommodations in a small town. They usually cost lesser than options in a major town. For example, we got a room (shared bath) at Hotel Kanslarinn in Hella for 79€ (99€ for ensuite) which was one of the cheapest accommodations we found in Iceland. But at Höfn we booked a summer house from Gerdi Guesthouse for ISK 30.000 (242€). Höfn was a costly town to stay in because of it is closest to the top attraction in Iceland, Jökulsárlón. Within the vicinity of Gerdi Guesthouse, all dining options were very costly so having a kitchen would’ve been a luxury. Sadly we did not get to stay in the summer house as it apparently “flooded” so we were given 2 rooms in Gerdi Guesthouse which proved to be one of the worst we stayed in.

Breakfast at Kanslarinn
Hot fried eggs and and crispy bacon – the best breakfast we got was here at Hotel Kanslarinn!

In comparison, we enjoyed our stay at Hotel Kanslarinn (reserved on Booking.com, paid in € cash upon check out) as the room was big, comfortable (had a sink!) and offered a nice hot breakfast. We enjoyed our fried eggs and bacon a lot. Our very clean shared bathroom was only shared between 3 other rooms so we never had an issue. Our option to stay in Hella was part of our route and to go on a horse ride nearby.

Similarly, we found very affordable accommodation and dining options in Keflavik town (Bergás Guesthouse at 125€ – Quadruple ensuite) as compared to Keflavik (nearest to airport) and Reykjavik. Its location was not directly near the airport and few would choose this part of town to stay in unless they have a car.

Cod Fish and Potatoes
Our only meal, Cod fish, in a restaurant on the last day before we left Iceland. Prices were affordable here in Keflavik town.

Iceland Budget Travel Tip #5: Pick Accommodations With A Kitchen

This is a very helpful tip to save money in Iceland where food is generally expensive. Fact: Food is very expensive in Iceland. You know this when you see the locals eating the cheapest cold sandwich in the tiny diner while you have the hot stuff from the menu. Also, I saw a pack of bacon in the supermarket with a price tag equivalent to SGD50! It is so bad that when we went to Amsterdam after Iceland, we found everything so affordable in Amsterdam! So when you book your accommodations, always aim for one with a kitchen so you can make your own dinner.

In Rekjavik’s main shopping area, the cheapest food option I found was Dunkin Donuts and the next cheapest was Subway. Dunkin Donuts offered some hot bagels with smoked salmon or other options at ISK 399 (3.22€). Dinners would easily set you back by 25-35€ for just a main course of chicken. So if you are on an Iceland budget travel and need to fill your stomach in the city, Dunkin Donuts would be your best bet.

Throughout our 9 days in Iceland, we stayed in 3 cottages and 2 apartments with a kitchen. Making your own meals while in Iceland can be an interesting experience and brought me some nice memories as well. It is also a good chance for bonding among family members when you cook, eat and wash up together. Just keep it simple in Iceland; it’s not like you’re competing for Master Chef!

Reykjavik Apartment - kitchen
We got lucky with our last apartment in Reykjavik, modern and luxurious – it was a free upgrade when they messed up our booking

Read on for Part 2: Iceland Budget Travel Tip #6 >> [Coming Soon]