Planning a trip to the breathtaking landscapes of Iceland? Understanding the local currency is key to managing your finances smoothly. Iceland’s official currency is the króna (ISK), a unique and interesting aspect of this Nordic nation. This guide will provide you with everything you need to know about Icelandic Money, from its history and denominations to practical tips for using it during your visit.
Understanding the Icelandic Króna (ISK)
The Icelandic króna, often denoted as ISK, is the sole legal tender in Iceland. The name “króna” shares its roots with other Scandinavian currencies like the Swedish krona, Danish krone, and Norwegian krone, all meaning “crown.” While Iceland is heavily reliant on electronic payments, understanding the króna and its physical forms can still be beneficial for travelers.
Icelandic currency comes in both coins and banknotes, each with distinct designs and values:
Icelandic Coins:
- 1 króna: A silver-colored coin, the smallest denomination in circulation.
- 5 krónur: Also silver-colored, slightly larger than the 1 króna coin.
- 10 krónur: Silver in color, and noticeably larger than the 5 krónur coin.
- 50 krónur: A gold-colored coin, making it easily distinguishable.
- 100 krónur: Gold-colored and the largest denomination coin you’ll commonly encounter.
Icelandic Banknotes:
- 500 krónur: Features a purple hue and the image of Jón Sigurðsson.
- 1,000 krónur: Green in color, displaying Brynjólfur Sveinsson.
- 2,000 krónur: Predominantly blue, adorned with the portrait of Jóhannes Kjarval.
- 5,000 krónur: Orange in color, showcasing Ragnheiður Jónsdóttir.
- 10,000 krónur: Reddish-brown, the highest denomination, featuring Jónas Hallgrímsson.
Icelandic Krona Banknotes
A Journey Through Time: The History of Icelandic Currency
The story of Icelandic money reflects the nation’s journey to independence. Before Iceland started issuing its own currency, it relied on the Danish krone, a consequence of being under Danish rule. The move towards an independent currency began in 1885 when Iceland first issued its own banknotes, marking a significant step towards financial autonomy.
In 1918, as Iceland gained autonomy from Denmark, the Icelandic króna was officially adopted as the national currency. Early banknotes included 5, 10, and 50 króna denominations, which are now all coin values, showcasing the evolving economic landscape. Initially, Landssjóður Íslands managed currency issuance, but in 1904, the Bank of Iceland took over, introducing the 100 króna bill. Later, the state, Ríkissjóður Íslands, issued the 1 króna note. Further changes came in 1928 when Landsbanki Ísland assumed responsibility, managing denominations from 5 krónur upwards. In 1935, the 500 króna note was introduced, a denomination that remains in use today, followed by the 25 and 1000 króna notes nearly two decades later.
The first Icelandic coins appeared in 1922 with the 10 and 25 aurar (equivalent to cents or pennies). This was followed by the introduction of 1 króna and 2 króna coins three years later, with the 1 króna coin still in circulation. A year later, 1, 2, and 5 aurar coins were added. Following Iceland’s full independence in 1944, all coins were redesigned in 1946, removing the Royal Monogram, symbolizing the break from Danish rule.
In 1967, further coins were introduced, including the 10 króna, followed by the 50 aurar, 5 króna, and 50 króna coins. This was partly a response to a significant drop in the króna’s value. A pivotal moment in Icelandic monetary history occurred in 1981 when hyperinflation led to a complete reformation and revaluation of the Icelandic króna. The currency was revalued by a factor of 100, and new banknotes and coins were issued. The currency code also changed from ISJ to ISK at this time.
The reformed 500 ISK banknote was created, featuring a design similar to the one in use today. In the subsequent five years, the 1000 ISK and 5000 ISK banknotes were introduced, also maintaining similar designs to the current versions. The most recent addition to Icelandic banknotes is the 10,000 ISK note, issued in 2013. Today, Seðlabanki Íslands (the Central Bank of Iceland) is responsible for issuing Icelandic money, while the printing is outsourced to De La Rue in England.
Faces of Iceland: Who are the People on Icelandic Banknotes?
Icelandic banknotes are not just currency; they are miniature portraits of national heroes and significant figures who have shaped Icelandic culture and history. Each banknote denomination features a prominent Icelander, celebrating their contributions to the nation.
500 ISK – Jón Sigurðsson
The 500 krónur banknote honors Jón Sigurðsson, a pivotal figure in Iceland’s fight for independence. He is revered as a national hero for his leadership and advocacy for Icelandic autonomy.
Icelandic krona 500 ISK banknote featuring Jón Sigurðsson
1,000 ISK – Brynjólfur Sveinsson
The 1,000 krónur note features Brynjólfur Sveinsson, a Lutheran Bishop at Skálholt. He is celebrated for his crucial role in preserving Norse mythology and sagas, ensuring these important cultural narratives were not lost.
Icelandic krona 1000 ISK banknote featuring Brynjólfur Sveinsson
2,000 ISK – Jóhannes Kjarval
Jóhannes Kjarval, one of Iceland’s most beloved painters, graces the 2,000 krónur banknote. His artistic contributions are highly valued, and Kjarvalsstaðir, an art museum in Reykjavík, is named in his honor.
Icelandic krona 2000 ISK banknote featuring Jóhannes Kjarval
5,000 ISK – Ragnheiður Jónsdóttir
The 5,000 krónur banknote is unique as it features Ragnheiður Jónsdóttir, the only woman depicted on Icelandic currency. A skilled seamstress, she dedicated herself to teaching her craft and was the wife of two bishops and daughter of Reverend Jón Arason.
Icelandic krona 5000 ISK banknote featuring Ragnheiður Jónsdóttir
10,000 ISK – Jónas Hallgrímsson
Jónas Hallgrímsson, featured on the 10,000 krónur banknote, is one of Iceland’s most prominent poets. He is renowned for his significant contributions to Icelandic literature, including the authorship of the Passion Hymns.
Icelandic krona 10000 ISK banknote featuring Jónas Hallgrímsson
Navigating Icelandic Transactions: Cash vs. Card in Iceland
Iceland is often considered a near-cashless society. You’ll find that debit and credit cards are widely accepted across the country, from bustling city centers to remote rural areas. Many locals rarely use cash for day-to-day transactions.
However, while card payments are dominant, it’s still wise to carry a small amount of Icelandic money in cash for certain situations. Cash can be useful for:
- Tipping: While not always expected, cash tips are appreciated for exceptional service.
- Smaller Establishments: Some very small businesses, particularly in more remote locations, may prefer or exclusively accept cash.
- Campgrounds and Budget Services: Cash might be more convenient for paying fees at campgrounds or for smaller, local services.
- Emergencies: Having some cash on hand can be a good backup for unforeseen circumstances.
While ATMs are available in Iceland, especially in Reykjavik and larger towns, relying solely on cash might be less convenient than using cards. It’s recommended to use your card for most purchases and keep a limited amount of ISK cash for the scenarios mentioned above.
Smart Spending: Tips for Managing Your Icelandic Money
Iceland is known for being an expensive country, but with some smart planning, you can manage your budget effectively and make the most of your Icelandic króna.
- Duty-Free Alcohol at the Airport: Alcohol in Iceland is heavily taxed. Buying your alcohol at the international airport upon arrival can save you a significant amount of money. This also saves time, as alcohol is only sold at specific liquor stores with limited hours.
- Economical Grocery Shopping: Opt for budget-friendly supermarkets like Bónus and Krónan for groceries. Stores like 10-11 and Hagkaup, while convenient for late-night shopping, are considerably more expensive.
- Embrace Local Swimming Pools: Icelandic swimming pools are a fantastic and affordable way to experience local culture and relax. They are significantly cheaper than many other tourist activities.
- Seek Tour Deals: Explore deals and special offers on tours. Many tour operators offer budget-friendly options or discounts, especially during the off-season.
- Plan a Detailed Budget: Before your trip, create a realistic budget. Research average costs for food, accommodation, activities, and transportation in Iceland to avoid overspending.
- Compare Accommodation Options: Don’t automatically assume Airbnb is the cheapest. Sometimes, hotels, especially budget hotels or hostels, can offer more competitive prices.
- Drink Tap Water: Iceland boasts some of the purest tap water globally. Carry a reusable water bottle and refill it – there’s no need to spend money on bottled water.
- Utilize Happy Hour Apps: Download apps like the Appy Hour app to find deals on drinks at bars and restaurants, helping you save on your nightlife expenses.
Tax-Free Shopping: Reclaiming VAT in Iceland
Visitors to Iceland can benefit from tax-free shopping on purchases over 6,000 ISK. This applies to goods like clothing and souvenirs, excluding food and drinks. When shopping, remember to ask for a tax-free receipt. Upon your departure, you can claim your VAT refund at the tax-free office, typically located at Keflavik International Airport. The standard VAT rate in Iceland is around 25%, with a reduced rate of 7% on certain goods, so reclaiming the VAT can offer substantial savings.
Woman tourist in Icelandic gift shop in Reykjavik
Icelandic Currency FAQs
How much is $1 US in Icelandic Króna?
Currency exchange rates fluctuate, but you can use a currency converter for the most up-to-date exchange rate. As a general reference:
- 1 USD ≈ 127 ISK (This is an approximate value and can change)
- 5 USD ≈ 635 ISK
- 10 USD ≈ 1270 ISK
- 50 USD ≈ 6350 ISK
- 100 USD ≈ 12,700 ISK
For real-time conversion rates, use a reliable online currency converter.
What is the best currency to use in Iceland?
The best currency to use in Iceland is undoubtedly the Icelandic króna (ISK). While credit and debit cards are widely accepted, using ISK ensures you’re transacting in the local currency without any potential exchange rate issues at the point of sale for card transactions in foreign currencies.
Do I need cash in Iceland?
While Iceland is largely cashless, carrying a small amount of cash is advisable. It’s useful for tipping, smaller vendors, campgrounds, and as a backup. However, for the majority of your transactions, cards will be sufficient.
Is Iceland expensive?
Yes, Iceland is considered one of the more expensive countries in the world. This is due to various factors, including import costs, high wages, and VAT. Accommodation, food, and tours can be pricey. Planning your budget carefully and utilizing money-saving tips is essential for a cost-effective trip to Iceland. You can find detailed cost of living information for Iceland on websites like Numbeo.
Laugavegur street in Reykjavik, Iceland
Conclusion: Your Icelandic Money Matters
Understanding Icelandic money, the króna, is a practical aspect of planning your trip to this incredible destination. While Iceland embraces card payments, knowing about ISK, its history, and smart spending strategies will enhance your travel experience and help you manage your finances effectively as you explore the land of fire and ice. Prepare for your adventure, budget wisely, and enjoy the unique experiences Iceland has to offer!
