I’ve been on a tear lately where I travel to expensive islands, get initially shell-shocked by food prices, then wonder if I’ve made a critical mistake in choosing my destination.

First Maui, then New Zealand, and now it’s happened with Iceland.

Within hours of landing in Iceland, I was not only freezing in my jeans, but I had dropped $30 on untoasted bread topped with razor-thin salmon slices and hard-boiled eggs, paired with grocery store yogurt cups.

I worried for my wallet.

HOWEVER.

If you know me, you know I don’t accept trip retail prices at face value. If I couldn’t find ways to save on this Iceland trip, I honestly wouldn’t have gone at all. And would I be able to live up to my name if I couldn’t figure out how to get the expensive thing for less?

While Iceland is difficult to travel hack, I saw it as a challenge and still found some non-obvious ways to save almost half off our trip.

Here’s how I did it.

Want to just see how much we spent? Click to jump to the TLDR version.

How Expensive Is Iceland, Really?

First, you have to know what kind of costs you’re dealing with. Getting to Iceland is famously cheap, and lodging wasn’t noticeably more expensive than other countries in Europe. But there were a couple of categories that were undeniably more expensive:

Eating Out
Iceland is an island, so a lot of the food is flown in. In Reykjavik I saw a Vietnamese banh mi sandwich on a cafe menu for $15. In case you glazed over that sentence, let me repeat that:

A banh mi sandwich that cost $15.

For perspective, in NYC an expensive banh mi sandwich costs about $7. Where you live it might cost half that. So if you live in a low-cost of living place, be prepared for not only out-of-this-world landscapes, but some equally otherworldly food prices. Even at the grocery store where I expected cost savings, a dozen eggs cost about $9.

Clothing
If you had dreams of looking like a cute ski bunny in one of those Icelandic wool sweaters, well, you might want to think again. I saw them for sale for $180 at a flea market, and even higher prices at a legit gift shop.

I passed by a secondhand shop and checked a price for a used fair isle sweater. It was still $80.

Research what to pack ahead of time (especially the weather) so you don’t end up paying too much for clothes in Iceland. Here’s my post on what I brought.

Alcohol
There were two unopened bottles of wine in our Airbnb, which my husband and I almost opened. Until we saw the sign. It read: “If you open these wines, please leave $15 to replace with a new one.” If the Airbnb owner was trying to recoup money for these wines, clearly they’re hard to get. Later we found out that you can only buy alcohol at a few designated liquor stores, which were out of the way, and buying beer out costs about $10 minimum. The best bet is to pick up alcohol from the duty-free section when you land at the airport.

Trip Overview

One big reason why we chose Iceland is because we thought it was a good fit for families–I’d be traveling with my husband and his son. The flights are manageable at less than 6 hours from the East Coast, there are wide open spaces for running around and impromptu adventures, and the Icelandic pastime of hanging out in outdoor heated pools was something everyone could do.

Choosing the destination itself ended up being the extent of our planning.

I got too distracted with other trips to even think about a real itinerary with multiple hotel bookings and day-by-day schedules. As a last-ditch effort I brought an Iceland travel book on the plane, but instead I watched “Avengers: Infinity Wars” and “Black Panther” (both of which I loved).

Planning on the fly, it is.

Because we failed to plan this trip, we stationed ourselves in Reyjkavik, rented a car, and did day-trips from there. We were definitely limited by how much driving we could do in a day without losing our minds.

Tip: Next time, I would plan the lodging ahead of time and drive Ring Road, which is exactly how it sounds. It’s the road that takes you around the outer rim of entire country, so we would have stayed in a different town every few nights.

Our six-day itinerary, at a glance:

Day 1 – Reyjkanes peninsula
Day 2 – The Golden Circle: Pingvellir National Park, Geysir, Guilfoss waterfall
Day 3 – Reykjavik
Day 4 – South Coast: Seljaslandfoss and Gljúfrabúi waterfalls, Seljavallalaug, Skógafoss waterfall, black sand beach in Vik
Day 5 – Reykjadalur hot spring hike
Day 6 – Snaefellsnes peninsula

The theme for our trip was enjoying the natural beauty of Iceland: admiring volcanic landscapes, getting up close and personal with waterfalls and black-sand beaches, and taking advantage of natural hot springs and outdoor pools.

As for money, per usual, I don’t keep budgets for vacations. We spend what we spend, and deal with the consequences later.

The Savings Strategy

Where I had lacked the planning chops for the activities, I made up for in how I was going to pay for all this stuff.

Part of the reason why I’m so blasé about the actual trip spending is because I take the time to plan the money part upfront, which helps save thousands of dollars.

Saving money on trips isn’t that much different from saving money in your everyday life. The most effective ways to save money are by focusing on the big wins: cutting costs on housing, transportation and food.

Lots of people will save money in Iceland by choosing to camp. I would love to try camping! But we’ve never really camped before, and it doesn’t seem smart to start up a new hobby that requires survival skills in a foreign country.

And the usual travel hacking strategies wouldn’t work well in Iceland. Airlines make you hand over too many points to redeem for flights to Iceland, hotel points are useless when those hotel chains have barely got a footprint there, and how exactly do you save on food besides stocking up on ramen from the grocery stores?

The key is to use flexible credit card reward points that you can redeem in multiple ways. If you’re based in the US, there are two types of rewards credit cards you’re going to want to focus on:

• Cash-back cards that let you redeem points for statement credits.
• General travel rewards cards that let you redeem points multiple ways: transferring them to partner airlines or hotel programs, booking travel through the card’s own portal, or for statement credits.

When deciding which cards to sign up for, look for ones that offer a generous sign-up bonus, like 50,000 points plus.

Here are the three specific cards we used:

1. Chase Sapphire Reserve
Type of card: General travel rewards
What we used it for: Flights

The annual fee for this card is steep, $550, but I’ve been able to redeem points for over $2,500 worth of flights just this year. A less-expensive alternative to this card is the Chase Sapphire Preferred (affiliate link), which has a $95 annual fee, but earns a 60,000 sign-up bonus. Note that using Preferred points for travel is valued at 1.25 cents per point, which is less than the Reserve’s 1.5 cents per point.

2. Capital One® Venture® Rewards Credit Card
Type of card: Cash back (travel statement credits only)
What we used it for: Car rental

A while back I had my husband sign up for the Capital One Venture card for the 50,000 points. I knew we’d use it for travel…at some point. I just didn’t know when. We ended up using this card to shave off a few hundred dollars off the car rental.

3. Bank of America Premium Rewards
Type of card: Cash back
What we used it for: Food

I always have a cash-back credit card in the rotation, because they’re so simple to redeem and can use the points for a statement credit on basically anything. I knew that we’d be spending a lot of money on food in Iceland, so I earmarked this card for all grocery and restaurant costs.

Flights for $0

I didn’t want to deal with figuring out rules for discount airlines like WOW Airlines, so we paid a little bit more to fly United. Plus, we could each earn 5,200 United miles from the flight distance, which might come in handy in the future. The roundtrip flights we chose from NYC to Reykjavik cost $463.13 per person.

I checked Award Hacker to see how many points I’d need to avoid paying out of pocket. The lowest amount of airline miles I could redeem for this trip was 40,000 per ticket using Japan Airlines miles, but I knew I could get a better deal. I paid for the United flights using Chase Sapphire Reserve points through their travel portal for 1.5 cents per dollar. Each ticket cost me 29,534 points, so 88,602 total for the three tickets and exactly $0 out of pocket.

A Home Base in Reykjavik

The first thing to know about Iceland lodging is that you have to book things fast. There are 350,000 people who live in Iceland, and 4.4 million tourists who visited last year. The number of tourists visiting every year is rising at alarming rates. Look, I’m not a math genius, but considering how sparse Iceland is, one could deduce that there might be stiff competition for hotel rooms and Airbnbs.

The Airbnb I was initially looking at got swooped up by the time I went to reserve it, so that was a reality check. Mind you, we booked our Airbnb four months in advance, and even then the pickings were slim. For six nights we paid $1,389.37. We definitely could have saved money by staying in a cheaper apartment, but because we didn’t pay for the flights, saving money on lodging wasn’t a huge priority.

Side note: It was sobering to notice that everyone I saw going into our apartment building was a tourist. Were there any locals who lived there at all? It’s something to think about–how your role as a tourist affects the local economy.

How I Inflated the Car Rental Cost by $300

We love the freedom of being able to do whatever we want when we want, so we rented a car the entire time instead of booking tours.

I booked a car months in advance for $612. Then I discovered Autoslash, which tracks your reservation and e-mails you if it finds a better deal. I kept getting deals for Europcar, which I had never heard of, but had terrible reviews online. But two weeks before the trip Autoslash sent me a deal with Hertz for $328. Hey, that’s a big difference! So I cancelled the old existing reservation and booked the cheaper one.

But those savings didn’t last.

Because I had PTSD from a painful car rental experience, I made an emotional decision at the car rental counter: we not only bought Hertz’s daily car rental insurance, but we also added in gravel insurance on top of that. These insurance add-ons brought out car rental cost up to $604.91. If we hadn’t sprung for the insurance, the car rental would have cost about $350. In retrospect, I think using Chase Sapphire’s credit card for primary insurance like we normally do would have been fine, but my logic was overshadowed by a previous bad experience.

When we first drove past a gas station, I thought gas prices in Iceland seemed similar to the US, about $2.66 per gallon. Nevermind. It’s $2.66 per LITER. Four liters equals a gallon. We spent $178 on gas.

Then there are costs to get to and from our NYC airport, which always bum me out since we don’t live super close to any of the three airports here. The time of day for getting a Lyft definitely makes a difference, because at 6pm on a Wednesday it cost about $96, but in the opposite direction at 3pm on a Wednesday it cost $54. For that first ride, we probably would have been better off using a cab, which charges you by distance. Per usual, total costs to get to and from the airport were cringe-y: $168.39.

About Those $15 Banh Mi Sandwiches

I’ve exaggerated the food costs earlier, because I want to set expectations. The easiest way to overspend in Iceland is to not pay attention to food costs. Which is what we kind of did.

We thought since we were mostly buying food at grocery stores that we had free reign to pretend like we’re on that show Supermarket Sweep.

But the cost savings were cancelled out because we bought expensive grocery store food that doesn’t fill you up, like pre-made sushi. I saw my husband pick up two packs of sushi as a meal for $25 and I redirected him immediately. We never seemed to leave the grocery store without spending at least $50, which covered about two meals for the three of us.

Despite your best efforts, sometimes you can’t help but eat out if you’ve been sightseeing all day and there are literally three food options where you are. The tab for a sit-down meal was usually around $50 for lunch and $70 for dinner.

The ethnic foods I like to eat happen to be expensive in Iceland. I’ve mentioned the banh mi costs already, but we got foiled even when we looked up “budget-friendly” meals online one night. We went to one of the suggestions, Noodle Station, where a big bowl of pho cost $14.30.

Then there was the Vacation FOMO dilemma: should we go out for at least one fancy meal? Across the street from our Airbnb was a highly-rated restaurant offering three-course menus for about $80 dollars.

Would I regret not trying the lamb here, at least? But at the same time I worried that if we spent $80 per person on a three-course meal, I’d probably end up regretting it. We weren’t in Iceland to be foodies, but to sightsee. There are very few meals that are memorable, so I had to remember how disappointed I’ve been at restaurants to keep myself in check. It’s not like I’m never going to travel for foodie purposes, but to me, Iceland isn’t the destination for that.

The one food purchase I feel bad about is spending $70 on three pizzas. In terms of ingredients, pizzas are already massively overpriced, and I could have bought a seafood soup for the same price, which I would have enjoyed more and requires more effort to make.

All in all, we spent $688.36 on groceries, food out, and meals at the airport. All of it was pretty mediocre, except for the one burger from Kaffi Krus that my husband deemed “the best burger he’s ever had his entire life.” Considering that I estimated food costs would be $800, I’m pleasantly surprised here. And man it felt good to erase most of these costs with my Bank of America credit card points .

Hot Springs, Waterfalls and Scenery for Days

For us, activities are where the savings magic usually happens. We like scenery. Scenery costs hardly anything at all. Iceland has lots of it. We spent $38.31 on activities total. That’s all you need to know.

Alright, I’ll elaborate.

All of our activity money went to swimming in a local pool a few times, plus couple dollars here and there for parking at some sights.

Neither one of us felt strongly about the Blue Lagoon, so we skipped it. Since Iceland is a hub of geothermal activity, there was no shortage of natural hot springs that cost $0.

Other than that, we drove around and took pictures of the landscape. One place I wished we had visited was the Westman Islands, which is off the south coast. The island seemed super cute and more like old-school Iceland. Reykjavik was nice to explore for a day, but I’m a city dweller, so when I vacation, I like rural.

The other area I wish we got to explore more was the Snaefellsnes peninsula. I love hanging out in adorable towns, just soaking up the atmosphere. The Snaefellsnes peninsula is supposed to look different from the rest of Iceland (like golden beaches instead of black sand), but we didn’t get a chance to drive around the entire peninsula and confirm that ourselves.

The Full Cost Breakdown

Costs for One Week in Iceland

Category (Highest to Lowest)	Raw Cost	Cost with Credit Card Rewards
Lodging	$1389.38	$1389.38
Air travel	$1329.03	$0
Food	$688.36	$99.29
Car rental	$604.91	$345.02
Gas	$178	$178
Travel to/from airport	$168.39	$168.39
Activities	$38.31	$38.31
Gifts	$0	$0
Alcohol	$0	$0
TOTAL	$4396.27	$2218.39

Six days in Iceland cost us $2,218.39 for three people, or $739.46 per person. Considering that we weren’t 100% frugal the entire time, I’m happy with those numbers.

Summary: How to Save on an Iceland Trip

While Iceland is an expensive country, there are lots of things you can do to slash costs. Here are my top tips:

• Look for flexible rewards credit cards that let you redeem points for out-of-pocket expenses.
• Consider going with a bigger group. For example, if my husband and I were seriously budget-hunting, we could had gone with another couple and HALVED our Airbnb and transportation costs. If you’re easy going, this is a huge money win.
• Visit in the off-season. We visited in the summer, which is Iceland’s high season, but in the winter there’s less demand and things are less expensive.
• Keep eating out to a minimum. Book lodgings with a kitchen so you can cook meals at home. Also, Iceland has Costco. If you have a Costco membership, bring the card with you.
• If you want to drink, after arriving in Iceland, don’t forget to stock up on alcohol from the airport.
• If showing up with a tent isn’t your bag, and you don’t want to plan, a good compromise is to rent a campervan. Not only do you solve two logistical problems in one go (transportation AND lodging), but you’ll save some money in the process. Plus, think of all the sights you’d get to have all to yourself by camping out in the parking lot and being there well before the busloads of tourists arrive.

Is Iceland on your bucket list, or do the costs totally scare you away? How do you typically handle car rental insurance?