Mon­ey-sav­ing tips for your trip

Almost everywhere nowadays you can pay with cards, making currency almost unnecessary when traveling. However, it's sometimes wise to carry cash for security. Recently, unexpected power outages in Spain and Portugal prevented card payments. Situations can also arise where your card doesn't work or vendors prefer cash payments, such as taxi drivers or restaurants. Many people also prefer to give tips in cash.

Avoid busy tourist spots and airports when buying currency

When you buy foreign currency, the bank or vendor sells it to you at the selling rate. If you choose to sell foreign notes, they are bought at the buying rate. Check first whether the currency you want to buy or sell is available from the service provider.

Also carefully check what exchange rate is offered before buying foreign notes, as terms can vary significantly. It's generally expensive to buy notes at airports, both at home and abroad, as well as at "street banks" abroad. Such providers often add fees that can be very high.

Better to exchange between foreign currencies in the respective countries

If you have foreign currency, e.g., US dollars (USD) that you want to exchange for euros (EUR), it's probably best to exchange the dollars directly for euros in a eurozone country, as then only the USD/EUR rate is used. If this exchange is done in Iceland (or in a country with a currency other than euro or dollar), you first need to sell the dollars and buy Icelandic krona, which then need to be sold again to buy euros. This means paying twice for the currency transaction. Therefore, it's better to exchange between foreign currencies in the appropriate countries. Also, avoid exchanging at airports or busy places where it's often much more expensive. Bank branches are likely the most economical option if available.

When using cards abroad, it's usually best to choose the foreign currency

When shopping abroad with a card, the withdrawal amount is converted to Icelandic krona. Exchange rates for major currencies in card transactions can be found on the website or app of the bank issuing the card. When looking at rates, base calculations on the card rate and selling rate.

Sometimes you can choose between paying in Icelandic krona or the currency of the country you're in when shopping abroad. Compare the terms before deciding which currency to conduct the transaction in. It's usually much more economical to shop in the foreign currency.

How to best use ATMs

Many people use ATM services to access cash abroad. Keep in mind that you have to pay for such services. Well-placed ATMs in busy tourist areas are usually expensive, and this also applies to ATMs at airports, both at home and abroad. ATMs in bank branches are usually cheaper and also a safer option. Avoid paying for cash withdrawals in Icelandic krona without first carefully checking the exchange rate offered by the ATM. Here too, it's usually much more expensive to choose Icelandic krona than the foreign currency.

Most banks also charge a fee when their cards are used for ATM withdrawals. For example, it's often more economical to use a debit card than a credit card when withdrawing money from an ATM, and also often cheaper to withdraw a larger amount in one transaction than many small ones, as a minimum fee is often charged for each withdrawal.

Finally, if you need cash domestically in Iceland, it's best to use a debit card and ATMs of the bank that issues the debit card. Generally, no fee is charged for such withdrawals.