Preparing to relocate to Iceland? Expats are increasingly gravitating towards this location due to its awe-inspiring natural scenery, robust economy, and exceptional standard of living.
Whether you’re relocating to Iceland for work, study, or merely to take in the breathtaking scenery, you’ll need a method for managing your finances there. Having a local bank account could be practical, allowing you to receive your wages (if you are employed) and pay your expenses.
However, what is the process like to establish a bank account in Iceland, and is it possible to do so from the United Kingdom prior to your relocation?
The following contains all the information you require. The essential banks available to you, the documentation required to open an Icelandic bank account, and the associated fees will all be discussed in our comprehensive guide.
How to open a bank account in Iceland as a foreigner?
As a foreign national, there are no restrictions prohibiting foreign citizens from establishing a bank account. However, kennitala, an Icelandic identification number, is mandatory for all new applicants at all institutions in Iceland. Every citizen is required to possess an electronic identification card, as it is utilized for all activities such as banking and tax payment.
Electronic IDs must be applied for in person by foreign nationals.· Individuals from EU member states may do so at Registers Iceland; however, those from non-EEA countries must submit their applications to the Directorate of Immigration.
Can you open a bank account in Iceland as a foreigner from the UK?
A British citizen may establish an Icelandic bank account; however, it is improbable that they will be able to do so while still in the United Kingdom.
This is because opening a bank account in Iceland requires an electronic identification number. Additionally, you must provide your residential address in Iceland to obtain this.
Those who have not yet relocated to Iceland or secured housing in the country will be required to postpone their plans until they reach.
Can you open a bank account online in Iceland?
Online opening of an Icelandic bank account is indeed feasible. However, you will once more be required to have your electronic ID number on hand.
After obtaining your electronic ID, creating an online account should be a relatively straightforward and uncomplicated procedure. Since every bank in Iceland has adopted digital banking technology, a substantial number of their services are accessible online.
What documents do you need to open a bank account in Iceland?
Although specific criteria may differ among financial institutions, the following documents are typically required to establish a bank account in Iceland:¹
- The SIM card on your mobile phone stores your electronic ID; therefore, you must possess a compatible SIM card. You can activate your Kennetala ID through a mobile phone provider or bank once you have obtained it.
- The passport
- Permit of residence (if you are a citizen of a non-EU/EEA nation).
Types of Icelandic bank accounts
In general, banks in Iceland provide two primary categories of accounts:
- Debit accounts are the Icelandic equivalent of current accounts in the United Kingdom; they are intended for remuneration deposits. You may be presented with the option to register for a debit card instead of an account when you visit the bank’s website. You will obtain access to the debit account and linked card upon doing so.
- There are numerous types of savings accounts, such as those that accrue interest, those that offer fixed interest, those designed for first-time homebuyers, and those specifically designed for young adults and retirees.
Which Icelandic bank is best for foreigners and expats?
Iceland is serviced by three primary banks catering to retail consumers. Landsbanki, Íslandsbanki, and Arion Bank are the three.
Let us examine each of these individually, considering the benefits they provide for newly arrived guests.
Íslandsbanki
Originating in 1875, Çslandsbanki is a nationwide universal bank that operates a system of ATMs and 12 branches.² It ranks as Iceland’s second-largest bank.
Its clientele consists of both individuals and organizations and its product line comprises the following:
- Current/debit accounts
- Savings accounts
- Debit and credit cards
- Car finance, mortgages, and personal loans are all types of loans.
Landsbankinn
Although the current iteration of the main bank in Iceland, Landsbankinn was not founded until 2008, its origins predate 1886. The bank is under the ownership of the Icelandic National Treasury.⁶
It provides banking services to both individual and corporate clients, constituting a universal bank. In addition to extensive branch and ATM locations throughout the nation, it provides digital banking services.
Among its merchandise are the following:
- Savings accounts
- Payment cards
- Automobile loans, as well as loans indexed and unindexed for inflation and mortgages.
Arion Bank
Arion Bank, the third-largest financial institution in Iceland, operates in three distinct sectors: retail banking, corporate and investment banking, and markets. It operates fifteen service centers and branches throughout the nation.³
It provides retail customers with the following services:
- Payment cards
- Savings accounts
- Loans, including mortgages and vehicle financing
- Pension savings
- Insurance.
Digital-only alternatives to banks
Additionally, Iceland is home to several money management providers that operate exclusively online. Typically, these do not maintain physical branches; therefore, account management is conducted via the Internet or a mobile application.
Creating an account can be a convenient endeavor, particularly if you have not yet relocated to Iceland. However, due to the fact that these are not bank accounts, the same security, protections, and services may not apply.
What kinds of banking fees and charges can you expect in Iceland?
No matter where in the world you conduct your banking transactions, you must always be mindful of potential fees. The following is an overview of the types of banking fees that may be assessed upon opening a bank account in Iceland.
Account maintenance fees
Although it may differ among financial institutions, maintaining an Icelandic bank account will almost always incur an annual fee.
It is highly improbable that an account maintenance fee will be assessed on the account itself. A debit card fee, however, is almost certainly an annual expense. This can vary between 790 and 950 ISK, or approximately £4.78 and £5.75.
Payment charges
Additional payment fees may be assessed by Icelandic institutions for one-time transactions, direct debits, and debit card usage.
Although these charges are generally quite nominal, they have the potential to accumulate. To provide an illustration, the following are the fees assessed for account opening with Landsbankinn:
- For transactions conducted via online banking, a fee of 80 ISK (£0.48 GBP) is assessed.
- Payments made via debit card: 18 ISK (approximately $0.11 GBP).
- Online banking fees for international transactions amount to 900 ISK (£5.45 GBP).
Other fees to look out for
Additionally, depending on the bank, the following may incur fees:
- Card transactions and currency withdrawals made overseas
- Bank services are conducted in branches or service centers (online transactions are preferred whenever possible)
- Credit cards typically entail an annual fee.
- A printed account statement is being requested.