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Similar to the rest of official Scandinavia, Iceland is very expensive for locals and almost off the charts for visitors. Unlike the rest of Scandinavia, at least Iceland has a good excuse for its high prices. With most things having to arrive by boat, it’s little wonder why ordinary items can cost double on this island country. Hotels in Iceland are no exception to this rule, but fortunately there are a handful of hostels in Iceland to make the country somewhat affordable for us budget travelers.

Of course, Reykjavik is the capital and by far the largest city, but it’s not necessarily the focal point of most trips to the country. It’s a pleasant little capital and it should definitely be explored, but Iceland is about the outdoors and its amazing scenery. There are Iceland hostels in several of the far-out cities as well, so visitors do have a way to travel around the country without breaking the bank.

There are several budget hotels in Reykjavik, but really only one Iceland hostel in the capital. The city is compact and everything is within walking distance of everything else as long as you start in the city center. Check prices of centrally located budget hotels and then compare them to the Reykjavik City Hostel. The name is slightly ironic since it’s actually well outside of the city center. Beds in their 6-bunk rooms start around €33 per night, with beds in their 4-bed rooms with a bathroom starting around €42 per night. They also have twin private rooms with their own bathroom starting around €56 per night. The hostel is located next to a park and also the city’s largest thermal swimming pool, which is actually open all year round, but it’s about a 30-minute walk to the city center if you don’t want to take an expensive 10-minute bus ride. Unfortunately they have the cheapest beds in town so many people do stay here as it’s the only place in Reykjavik that fits into some budgets.

The Grundarfjordur Youth Hostel in the small fishing village of Grundarfjordur has beds in their 6-bunk dorm rooms starting around €33 per night. The town is located a 20-minute drive from the Snæfellsjökull glacier and 45 minutes from the ferry to the West Fjords. They’ve got a restaurant and boast the fastest internet connection in all of Iceland.

The Ósar Hostel in Hvammstangi might be the cheapest hostel in Iceland. They are in the North West part of the country, in a peaceful community walking distance from a colony of Seals as well as the Hvítserkur Rock, which resembles a prehistoric Dinosaur.