Planning a trip to Iceland? Get the best exchange rate for the Icelandic Krona and how to sort your travel money once in the Land of Fire and Ice!
We all love traveling and discovering new places and countries, don’t we? Now, we need to be aware that it implies spending some money. It is essential to be aware that not every country uses the same type of money we use at home. Foreign currencies can have a significant impact on your budget, both negative or positive depending on each case. If you make a trip to Iceland, then we will teach you a thing or two about the Icelandic Króna (Kronur in plural), our official currency.
Back in the old days, Iceland was under the rule of the Kingdom of Denmark. They had their own currency called “Danish Krone,” and it was the legal tender of Iceland too. Krona means “Crown” in English as the coins produced had a crown on the reverse side. Even though the Danes still controlled the Nordic nation, a new currency came to life and took the place of the Danish Krona: The Icelandic króna.
The Icelandic currency was first coined in 1874 when the central bank of Iceland was given the competencies required to issue bank notes. That happened long before Iceland was an independent country itself. Once the rule of the Kingdom of Denmark came to an end, Iceland then became a part of the Norwegian crown. The founding of the Republic of Iceland did not happen until 1944. It took us a while to gain autonomy from Denmark and foreign rulers.
In Iceland, you can use your credit card to pay for anything, regardless of its price. But If you still wish to have cash when traveling to Iceland, it is essential to know how to get the best deal. There are several ways to get foreign currency:
· Ordering foreign currencies from your bank: you should be aware that you need to submit your request with enough lead time. Money is not provided immediately; it takes a couple of days for the entity to get the currency you are looking for from the central bank. Bear in mind commissions do apply for this type of transaction.
· Currency Exchange Offices: They usually operate in tourist areas. They make a profit from that, so besides having a slightly different rate form the official one; they also apply a commission.
· Local ATMs: This is the best option when it comes to a rate conversion; they use the official one. You don’t have to wait, just use your credit or debit card and voilà: Icelandic money at your disposal. Now, you still need to check with your merchant if they charge you for using foreign ATMs. At Keflavik International Airport you have ATMs at your disposal.
The value of the Icelandic krona dropped during the economic crisis of Iceland back in 2008, but now it is stronger. You can check the updated exchange rate here. A great trick is to take money out of the ATMs when the Icelandic króna is at a low point. I know that sometimes this is not possible for every traveler. They cannot wait for the rate to change as they need to get the money immediately. But if you can take a bit of time, then know that If the exchange rate falls, it means you will get more value for your Euros or Dollars if you come from the United States!
We are all about saving money and getting the best out of every dime! Do remember that besides getting a favorable exchange rate, you can save even more money by requesting a tax-free receipt at each store.
Tax-free shopping is accepted for purchases of at least 6.000 ISK. Ask the clerk for your Tax-Free receipt, and they will give you a form filled-out and signed along with the receipt. Make sure it is signed. Otherwise, it will not be valid. You will be refunded the taxes of goods you plan on taking outside of Iceland’s borders. This includes clothes, souvenirs, books, food…etc. General VAT is 24%, and for food and books, it is 11%. Duty-Free does not apply for services such as spas, car rental services, tour guides among other services. That is because these items will be enjoyed in Iceland and cannot be taken outside its borders.
How much would the trip of your dreams to Iceland cost? Well, it takes a bit more research to get the answer to that question. But at least, you are now one step closer. Now that you are an expert on our currency, the only thing left to do is to prepare a detailed budget. Be sure to include the possible fees derived from any exchange rate differences. Unexpected expenses are more common than you think, even more so when you are traveling abroad. A great tip is to have some spare money or emergency funds. Having enough cash reserved will save the day if an unplanned expense comes up.