Around 60% of Icelanders use digital wallets for everyday spending. For new residents, setting up your Icelandic bank's mobile app and linking your debit card to Apple Pay or Google Pay covers almost every payment scenario.
Cash and ATMs
You do not need cash for daily life in Iceland. That said, keeping a small amount of krónur on hand is not a bad idea for the rare situation where a card reader is down or you are at a rural market.
ATMs are operated by the three major banks and can be found in towns and cities across the country. They are less common in very remote areas.
Withdrawal limits vary by ATM, typically between 50,000 and 500,000 ISK per transaction. Daily limits usually range from 300,000 to 500,000 ISK.
Foreign card withdrawals incur fees on both sides. The Icelandic ATM charges a fixed fee per transaction (ranging from about 165 ISK at Íslandsbanki to 605 ISK at Arion Bank, as of 2026) plus around 1% of the withdrawal amount. Your home bank will likely add its own fee (often 3-5 USD equivalent) plus a currency conversion spread. If the ATM offers to convert to your home currency, decline it and withdraw in ISK to avoid an additional markup.
Currency exchange
If you arrive with foreign cash, you can exchange it at the major banks or at the Arion Bank currency exchange desk at Keflavik International Airport.
Bank exchange rates are generally better than airport or hotel exchange desks. Compare rates before exchanging large amounts. The Arion Bank currency converter shows live rates.
For large transfers (moving savings to Iceland, receiving a foreign salary), traditional bank wire transfers carry significant fees and unfavorable exchange rates on a small currency like ISK. Services like Wise typically offer better rates and lower fees for international transfers. Our sending money guide compares the main options.
In general, avoid exchanging cash before you arrive. The ISK is not widely stocked at foreign exchange offices outside of Iceland, and the spread on pre-purchased krónur is steep. Bring a card that works internationally and exchange or withdraw ISK once you land.
Tipping
Tipping is not expected in Iceland. Service charges are built into prices at restaurants and cafés. Workers receive fair wages through collective bargaining agreements, and there is no cultural expectation of a tip on top of the bill.
If you receive exceptional service and want to leave something extra, rounding up the bill or leaving 5-10% is generous but entirely optional. No one will think less of you for paying the exact amount.
This is a meaningful difference from the United States, Canada, and many other countries. It also means that the price you see on a menu is close to what you actually pay (Iceland's standard VAT of 11% on food and 24% on most other goods is already included in displayed prices).
Managing money as a new resident
Once you have your kennitala (Iceland's national ID number), opening a bank account is straightforward. All three major banks offer accounts to new residents with English-language support. The process takes about 30 minutes. Our bank guide compares the options.
Your Icelandic bank will issue a Visa or Mastercard debit card. This becomes your primary payment tool for everything from groceries to rent.
A few practical tips for managing ISK as a new resident:
Salaries in Iceland are paid by direct bank transfer, typically on the first business day of the month. Budget accordingly, since many bills (rent, utilities, insurance) are also due at the start of the month.
The króna fluctuates. If you are sending money home or receiving income in a foreign currency, timing matters. Setting up recurring transfers through a service with low fees and mid-market rates helps smooth out the volatility.
Prices in Iceland are always displayed in ISK including VAT. There are no hidden taxes added at checkout. What you see is what you pay.
For a detailed breakdown of what things actually cost, see our cost of living guide and grocery costs guide.
Frequently asked questions
Does Iceland use the euro?
No. Iceland uses the Icelandic króna (ISK). Although Iceland is a member of the European Economic Area, it is not part of the eurozone. Euros are not accepted at most businesses.
Can I use my foreign credit or debit card in Iceland?
Yes. Visa and Mastercard are accepted virtually everywhere. Your bank may charge a foreign transaction fee (typically 1-3%), and you should always choose to pay in ISK when given the option. Make sure you know your card's PIN, since Iceland uses chip-and-PIN exclusively.
Do I need to carry cash in Iceland?
Almost never. Iceland is one of the most cashless countries in the world, and card payments work at nearly every business. Keeping a small amount of cash as a backup is reasonable but not necessary for daily life.
Is tipping expected in Iceland?
No. Service charges are included in prices, and workers earn fair wages. Tipping is neither expected nor customary. If you want to show appreciation for exceptional service, rounding up the bill is a generous gesture.
What is the best way to exchange currency for ISK?
Avoid exchanging cash before you arrive. Use your international debit or credit card for purchases when you land, and decline dynamic currency conversion at terminals and ATMs. For larger transfers, services like Wise typically offer better rates than traditional bank wires. Once you have an Icelandic bank account, transfer funds directly.
How much is 1 USD in Icelandic krónur?
As of March 2026, 1 USD equals roughly 124 ISK. The rate fluctuates daily. Check a live currency converter for the current rate before making any significant exchange. For context, the currency in Iceland has been relatively stable against major currencies through early 2026.
Last updated: March 2026
