Opening a Bank Account in Iceland
A practical guide to opening a bank account in Iceland, covering the three major banks, required documents, electronic ID setup, credit cards, and tips for foreign residents.
Why you need an Icelandic bank account
Iceland is one of the most cashless countries on Earth. Card payments and mobile apps dominate everyday transactions, from grocery stores to parking meters to the hot dog stand downtown. If you are moving here, you will need a bank account in Iceland within your first few weeks.
Your employer will pay your salary into an Icelandic bank account. Your landlord will expect rent via bank transfer. Utility bills, phone contracts, and subscription services all pull from a local account. Without one, basic life administration becomes unnecessarily difficult.
The good news: Iceland's banking system is small, stable, and straightforward. There are only three major banks and one digital challenger, so the decision is not overwhelming. This guide covers everything involved in opening a bank account in Iceland, from the documents you need to the differences between banks.
For a broader overview of what your first weeks in Iceland look like, see our first 30 days checklist. Banking is covered in our complete relocation guide as well.
Table of contents
The Icelandic banking system
Iceland's banking system was rebuilt from scratch after the 2008 financial crisis. The three banks that existed before the crash (Landsbanki, Glitnir, and Kaupthing) all failed.
Three new banks were created from their domestic operations: Landsbankinn, Íslandsbanki, and Arion Bank. Together, they hold virtually the entire domestic banking market.
Landsbankinn is the largest, with roughly 37% of total assets and 39% of the retail market (as of 2024). It is state-owned.
Íslandsbanki and Arion Bank each hold about 28% of total assets. Both are now fully privatized and publicly listed on Nasdaq Iceland. Arion Bank completed its privatization in 2018; Íslandsbanki followed in May 2025, when the government sold its remaining 45.2% stake to over 31,000 investors.
All three are universal banks offering the same core services: current accounts, savings accounts, debit and credit cards, loans, mortgages, and online/mobile banking. All three have English-language websites and apps. There is no foreign bank operating in Iceland, so these are your options for a full-service banking relationship.
In 2022, indó became the first new bank licensed in Iceland in over 30 years. It operates as a digital-only savings bank with no physical branches.
What you need to open a bank account
Opening a bank account in Iceland requires two things: a kennitala (Iceland's national ID number) and valid identification.
Your kennitala is the single most important number you will get in Iceland. It is required for banking, tax registration, healthcare, signing a lease, and nearly everything else. If you have not applied for yours yet, see our kennitala guide for the full process.
To open an account, you will need to bring:
Requirement | Details |
|---|---|
Kennitala | Must be issued and active |
Valid photo ID | Passport, Icelandic residence permit card, or Nordic driver's license (physical, not digital) |
Registered domicile | Your address must be registered with Registers Iceland (Þjóðskrá) |
Electronic ID (optional but recommended) | Lets you open the account online instead of visiting a branch |
Non-EEA citizens should also bring their residence permit. While not always explicitly required for account opening, bank staff may ask for it as part of their identity verification.
You cannot open an Icelandic bank account without a kennitala. Tourists and short-term visitors without Icelandic residency are not eligible. This is a strict requirement across all banks.
Getting your electronic ID
Iceland runs on electronic identification. About 97% of the eligible population uses an electronic ID (rafræn skilríki) for banking, government services, and digital signatures. You will need one too.
There are two types:
SIM-based electronic ID. The traditional method. Your electronic ID is stored on your phone's SIM card and linked to your Icelandic phone number. You log in by entering your phone number, then confirming with a PIN on your phone.
This requires an Icelandic SIM card from a provider that supports electronic IDs: Síminn, Nova, Vodafone, Hringdu, or Hringidan. Important: this does not work with eSIMs.
The Auðkenni app. A newer alternative that works with any phone number, Icelandic or foreign. The app stores your electronic ID on your smartphone and uses internet instead of the mobile network.
If you have a valid Icelandic passport and a phone with NFC, you can activate it through self-service anywhere in the world. If you do not have an Icelandic passport, you will need to visit a bank branch or Auðkenni registration centre in person.
Either type can be activated at any bank branch. Bring your passport or valid photo ID. Banks activate electronic IDs for their own customers free of charge; non-customers may pay a small fee.
The SIM-based option is the most widely used, but the Auðkenni app is becoming increasingly popular, especially among foreigners who may not have an Icelandic SIM card when they first arrive.
How to open a bank account in Iceland
Once you have your kennitala and electronic ID, opening an account takes minutes.
Online (with electronic ID). Download the bank's app, select "become a customer" or "open a debit account," and authenticate with your electronic ID. The account is created immediately.
You can order a debit card from within the app, which typically arrives at your registered address within five business days.
In person (without electronic ID). Visit any branch of your chosen bank with your passport and kennitala. The staff will set up your account and can activate your electronic ID at the same time. You can order a debit card on the spot.
Opening a basic debit account is free at all three major banks. There is no minimum deposit and no account opening fee. The account comes with online banking access and a mobile app.
Once your account is open, you can immediately add your debit card to Apple Pay or Google Pay. Contactless payment is accepted at nearly every retailer in Iceland, and many people use their phone for all daily transactions.
Comparing the three major banks
All three banks offer very similar products for a new resident. The differences are mostly in branch network, app quality, and loyalty perks.
Feature | Landsbankinn | Íslandsbanki | Arion Bank |
|---|---|---|---|
Market share (retail) | ~39% | ~28% | ~28% |
Branches | ~34 locations | ~12 locations | ~12 locations |
App language | Icelandic, English, Polish | Icelandic, English | Icelandic, English |
ATM network | 60+ locations | Shared network | Shared network |
Ownership | State-owned | Publicly listed (fully privatized May 2025) | Publicly listed (fully privatized 2018) |
Loyalty programme | Aukakrónur (cashback) | Various offers | Einkaklúbbur (300+ partner discounts) |
Landsbankinn has the widest branch and ATM network, which matters if you plan to live outside the Reykjavík capital area. Its app is available in Polish as well as English and Icelandic, which is useful for the large Polish community in Iceland. It is also the most common bank among Icelandic employers for salary processing.
Íslandsbanki has a strong digital presence and explicitly markets to foreigners moving to Iceland. Its website has a dedicated section for new residents.
Arion Bank has been rated as having the best mobile app in Iceland for eight consecutive years (through 2024, per Maskína surveys). Anyone who downloads the Arion app automatically joins its Einkaklúbbur discount club, which offers deals at over 300 shops and service providers.
In July 2025, Arion Bank and Kvika banki (an Icelandic investment bank) signed a merger letter of intent. Regulatory review was still in progress as of early 2026. If approved, the combined entity would be a larger player, but for now the two operate separately.
In practice, most new residents choose whichever bank their employer uses or whichever has the most convenient branch near their home. You can always open accounts at multiple banks if you want to.
Indó, Iceland's digital challenger
Indó is Iceland's first and only digital-only bank. It received its banking license in February 2022 and has grown rapidly since launch.
Indó has grown quickly since launch and now handles over 15% of all debit card transactions in Iceland (as of early 2025).
Indó invests customer deposits primarily in safer assets such as government bonds, interbank loans, and Central Bank deposits, rather than funding a large consumer loan book like the major banks.
The basics of opening an indó account:
Download the indó app (iOS or Android)
Authenticate with your Icelandic electronic ID (Auðkenni app or SIM-based)
The standard account requires being 18 or older; a teen account is available with parental authorization
You must have residency within the EEA
Registration takes about one minute
No account opening fee. No monthly fee. No transaction fees on domestic payments.
Indó includes a debit account, debit card, and savings "jars" with customizable goals. It does not charge a foreign currency markup beyond the Visa wholesale exchange rate, which makes it cheaper than the major banks for purchases abroad. It has recently introduced limited lending products, including overdrafts and a buy-now-pay-later feature, but does not offer mortgages or credit cards.
The main limitation for foreigners: indó requires EEA residency. If you are a non-EEA citizen living in Iceland on a residence permit, check whether indó's requirements match your situation. Non-EEA citizens with a valid kennitala and electronic ID have reported mixed results.
Credit cards and loans for foreigners
Getting a credit card or loan as a foreign resident takes time. All three major banks impose a waiting period before approving credit products.
At Íslandsbanki, foreign nationals must have held an active bank account in Iceland for at least 12 months before applying for a standard credit card. The same applies to personal loans.
Non-EEA citizens must also present a valid residence permit. Prepaid credit cards (secured by an upfront deposit) are available sooner.
Landsbankinn and Arion Bank have similar policies, though the specifics vary. Expect to wait at least a year before accessing credit.
This is not unusual by international standards, but it is worth planning for. If you are moving to Iceland and rely on a foreign credit card, keep it active during your first year as a backup. For everyday spending, your Icelandic debit card will work everywhere.
Keeping a foreign bank account
Most people moving to Iceland keep at least one bank account in their home country during the transition, and many keep one permanently. This is practical for several reasons: receiving money from abroad, holding savings in a non-ISK currency, and maintaining financial ties to your country of origin.
International transfer services like Wise are widely used by the foreign community in Iceland. Wise offers an ISK balance and can send money to and from Iceland at close to the interbank exchange rate, with fees typically much lower than what Icelandic banks charge for international transfers.
Revolut and N26 also work in Iceland, though they are not Icelandic banks and your deposits are not covered by the Icelandic deposit guarantee scheme.
If you are moving to Iceland from within the EEA, a SEPA transfer from your European bank to your Icelandic account is straightforward but can take 1 to 3 business days and may incur currency conversion fees.
For more on managing finances across currencies, see our cost of living guide, which includes current exchange rate context.
Deposit protection
All deposits held in a bank account in Iceland are protected by the Tryggingarsjóður innstæðueigenda og fjárfesta (TIF), Iceland's Depositors' and Investors' Guarantee Fund. The scheme covers up to €100,000 per depositor per bank (as of March 2026).
This is the same level of protection as the EU deposit guarantee standard. It applies to all Icelandic commercial banks and savings banks, including indó.
If you hold accounts at multiple Icelandic banks, each account is separately covered up to the €100,000 limit. Temporarily high balances (from property sales, inheritance, or insurance payouts) may be covered above the limit for up to six months.
Private pension savings
This is easy to overlook but worth setting up early. Iceland's pension system has two tiers: a mandatory pension fund (your employer automatically handles this) and voluntary private pension savings (séreignarsparnaður).
If you contribute 2% to 4% of your salary to private pension savings, your employer is required to add an extra 2%. That is free money. Most people set this up through their bank.
Private pension savings can also be withdrawn tax-free toward a first home purchase in Iceland, which makes them doubly useful if you plan to buy property down the road.
Your bank can set up private pension contributions when you open your account, or you can add them later through the app. For more on how Icelandic taxes and deductions work, see our tax system guide.
Frequently asked questions
Can I open an Icelandic bank account before I move to Iceland?
No. You need a kennitala, which requires a registered address in Iceland. You cannot get a kennitala without being physically present (or about to arrive) and having a place to live. In practice, you should plan to open your bank account in Iceland during your first week after arrival.
Do I need to speak Icelandic to open a bank account?
No. All three major banks offer English-language service in branches and through their apps and websites. Landsbankinn also offers service in Polish.
If you visit a branch in a smaller town, English support may be more limited, but central Reykjavík branches handle foreign residents routinely.
Which bank is best for foreigners?
There is no single best answer. Íslandsbanki has the most explicit onboarding for foreign residents. Landsbankinn has the widest branch network, which matters outside the capital area.
Arion Bank has the highest-rated app. If your employer banks with a specific institution, that is usually the simplest choice. You can open accounts at more than one bank.
How long does it take to get a debit card?
Account setup is instant. Debit cards are typically mailed to your registered address within 3 to 5 business days. You can use digital wallets (Apple Pay, Google Pay) as soon as your card is activated in the app, often before the physical card arrives.
Can I use my foreign bank card in Iceland while I wait?
Yes. Visa and Mastercard are accepted virtually everywhere in Iceland. Be aware that your home bank will likely charge foreign transaction fees (typically 1.5% to 3%) and the exchange rate may not be favorable.
Using a card from Wise, Revolut, or a similar service with low foreign exchange fees is a good interim option.
Is my money safe in an Icelandic bank?
Deposits are covered by Iceland's deposit guarantee scheme up to €100,000 per depositor per bank. Since the 2008 crisis, Icelandic banks have been rebuilt under strict regulatory oversight from the Central Bank of Iceland.
Íslandsbanki and Arion Bank carry Moody's A2 deposit ratings. Landsbankinn is rated A- by S&P Global Ratings (as of 2025). All three are investment-grade.
Last updated: March 2026
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