Last updated on April 4th, 2023 at 06:49 am
Iceland is an island country—known as “the land of fire and ice”—located in the North Atlantic Ocean. Although it’s part of the European Union, Iceland doesn’t use the euro (EUR). Iceland’s currency is the króna (ISK), which shares a history with Danish, Swedish, and Norwegian currency.
If you’re thinking of visiting Iceland, you’ll want to become familiar with the official currency of Iceland before you get there. Here’s our guide to using Iceland’s currency, including its history, denominations, exchange rate, and more.
The history of Iceland’s currency
Iceland’s history dates back to the 800s, when Norse settlers arrived in the region that became Reykjavík, its capital. For many years, Iceland was part of Denmark-Norway and later the Kingdom of Denmark. It gained its independence in 1944.
During the time of Danish rule, it makes sense that the Danes would bring their home currency to Iceland with them. For a while, this currency was the rigsdaler, until they replaced it with the Danish krone in the 1870s.
Norway, Sweden, and Denmark (which included Iceland) entered the Scandinavian Monetary Union and established a common monetary unit, the krone. Iceland started producing its own krone banknotes in 1885, but it didn’t create its own currency until 1918, after the Scandinavian Monetary Union broke up during World War I.
By now, Iceland was its own sovereign state—but not yet fully independent—and the Bank of Iceland began minting its coins in various denominations.
Iceland’s currency denominations
Because of high inflation, Iceland’s currency denominations have changed dramatically over the years. Originally, one Icelandic króna consisted of 100 aurar, but the Central Bank of Iceland has stopped producing aurar, and they’re no longer legal tender.
As of this writing, króna notes come in four denominations:
The plural form of króna is krónur.
Icelandic banknotes feature historical figures such as painter Jóhannes Kjarval and Jón Sigurðsson, who played a key role in Iceland’s independence. Each denomination has its own color to help people tell them apart.
Coins are available in 1-, 5-, 10-, 50-, and 100-króna denominations. They feature “land wights,” mythical spirits from Norse and Germanic mythology.
Iceland currency uses the code ISK, and the abbreviation “kr.” In writing, large numbers use a decimal point, not a comma, so 10,000 krónur looks like this: kr 10.000.
4 fascinating facts about Iceland currency
If you’re visiting Iceland, chances are you came to see the country’s geysers, waterfalls, and Northern Lights. But we think it’s worth taking a closer look at Icelandic currency to learn more about the history and culture of the country.
1. Its name comes from the word for “crown.”
The Danish krone, Norwegian krone, Swedish krona, and Icelandic króna all have the same origin. The word means “crown” in their respective languages. (Can you spot the Latin root? The Latin word for crown is corona.)
The Faroe Islands also uses the króna, but it’s actually a version of the Danish krone and has the same value. You can’t use Faroese krónur in Iceland.
2. The króna has been pegged to two other currencies.
Currencies naturally fluctuate, but some countries peg their money to other currencies to keep them more stable. Iceland has done this twice: first to the British pound (GBP) between 1925 and 1939, and then to the U.S. dollar (USD) until 1949.
Iceland has considered switching to a different monetary policy—such as pegging the króna’s value to the euro or even converting to the Canadian dollar (CAD).
3. Iceland revalued the króna in 1981.
Iceland’s financial markets have had a few rough patches, and the central bank stepped in to revalue the króna in 1981. It introduced a new 500 ISK banknote and revalued its circulating currency so that 1 króna (new) equaled 100 krónur (old). More banknotes followed, with the largest—10,000 ISK—arriving in 2013.
4. It’s one of the smallest countries with its own currency.
Iceland has a population of about 376,000, making it one of the smallest countries in the world with its own monetary system. The only one that’s smaller is Seychelles, which is home to 100,000 people and uses the Seychellois rupee.
Many other small countries simply adopt a neighboring country’s currency, the way that some Pacific Islands use the New Zealand dollar.
Understanding and using Icelandic money: 4 tips
So you’ve landed at Keflavík International Airport—now what? Before you head off to the Golden Circle, should you withdraw some króna from the ATM? Here’s our handy travel guide concerning Iceland currency.
1. You can use cards everywhere—except for bathrooms.
You shouldn’t have any trouble paying with credit cards or debit cards in Iceland. Most retailers accept Visa and Mastercard and occasionally American Express.
You may encounter some sites that are cash-only, though. Many bathrooms charge a small fee to enter, so have a few coins handy just in case.
2. Don’t worry too much about tipping.
Iceland has a high cost of living, and you may notice that prices are higher than you’re used to. But it means that workers are paid a living wage and don’t expect tips. If you want to leave a few krónur, no one will object, but tipping in Iceland isn’t standard.
3. There aren’t many places to exchange money in Iceland.
Some countries have a wide range of options for exchanging money: at airport kiosks, bureaux de change, and even money changers on the street. Iceland isn’t one of them. Outside of Keflavík International Airport, your best bet is to go to a bank to exchange money or withdraw Icelandic currency from an ATM.
4. Visitors can get a refund on VAT.
Iceland charges a value-added tax (VAT) of 11%-24% on most goods and services. If you aren’t a citizen or resident of Iceland, you can get a refund when you leave the country. Just remember to save your receipts!
Iceland also offers tax-free shopping in the duty-free section of Keflavík Airport for both departing and arriving travelers.
Icelandic króna currency exchange rates
The value of Icelandic currency goes up and down over time, so it’s important to check the exchange rate before converting your money. You can use a currency converter to view the latest rates. For example, 1 USD will be worth a specific amount of krónur today, and it may be worth a different amount tomorrow.
If you’re paying with a card or withdrawing money from an ATM, choose to pay in the local currency so that your own bank will determine the rate. This is often better than what you’ll get if you allow the merchant or ATM to set the exchange rate.
Still, you can expect your bank to charge a fee for international payments, so you may want to exchange money in advance or make an international money transfer.
Send money overseas with a mobile app
Iceland’s currency, the króna, is the only currency you can spend in Iceland. If you live and work in Iceland or you’re visiting the country from overseas, being able to make international money transfers can make your life easier.
Remitly offers a convenient mobile app that you can use to send money overseas. With transparent pricing and a fair exchange rate, you’ll be able to send more money home to your friends and family.
Download the app today to get started!