Most first-time visitors over-pack cash for Iceland. The honest answer is that you can complete an entire trip on cards and may never touch a krónur note — but a tiny reserve removes the rare edge cases.
What "use card everywhere" actually costs in a cash-heavy country
You spend $400 over a week using only your card:
Forced to use airport ATM (bad rate): $12
Small merchants charging surcharge: $8
Two DCC swipes: $14
Total: about $34 — and you still ran out of cash
With the right cash buffer + no-FX card: ~$2
Card First, Almost Always
Cards work from Reykjavík to remote Ring Road stops. Hotels, restaurants, fuel, tours, and shops all take Visa and Mastercard, usually contactless. For the vast majority of travelers, cards cover 95–100% of spending.
- No-FX Visa or Mastercard handles nearly all purchases
- Contactless accepted widely; chip-and-PIN for unattended pumps
- ATMs exist but you will rarely need one
How Much Cash to Actually Carry
If you carry any cash at all, ISK 3,000–5,000 ($20–$35) is plenty. The mistake is exchanging $200–$300 at an airport kiosk before the trip and losing 3–6% on the spread for cash you never spend — then converting the leftover back at another loss on the way home.
The cash you didn’t need
Exchange $300 to ISK at an airport kiosk → lose ~$12–$18 on the spread.
Spend ISK 4,000, fly home with the rest → lose again converting back.
Carrying ISK 5,000 and paying everything else by card avoids both losses.
The Keflavík Airport ATM Trap
A traveler who panic-withdraws ISK 30,000 (~$215) at Keflavík on arrival pays the foreign ATM fee, the operator fee, and often a 5–8% DCC markup if they accept the home-currency prompt — losing $15 to $25 on cash they will struggle to spend.
The cleaner path: skip the airport ATM entirely and use the card you brought. If a small cash buffer feels safer, withdraw under ISK 5,000 from an Arion or Landsbankinn bank ATM mid-trip and choose ISK on the screen.
One bad ATM in Iceland
Withdraw ISK 30,000 at the airport with DCC accepted: ~$25 lost in markup and fees.
Skip the ATM and pay by card the entire trip: $0 lost.
Where Cash Still Helps
- A small tip at a remote guesthouse
- Roadside honesty boxes and some farm shops
- Some campground kiosks during off-hours
- A backup for the rare card-terminal outage on the Ring Road