According to new figures from the Central Bank (CBI), Icelanders spent nearly ISK 137bn with payment cards in August, an increase of more than 7% YoY. In price- and exchange rate-adjusted terms, the real increase was over 2% YoY. Growth in card turnover is due entirely to an increase in card use abroad, which was up 12% between years, while turnover in Iceland shrank by 0.6% in real terms.
Payment card turnover in August: Growth driven by overseas spending
Payment card turnover grew year-on-year in August, owing entirely to card use abroad. Icelanders have been travelling with a will this year. Households are well positioned, and private consumption will probably continue on its steady growth path in the coming term.
Card turnover has fluctuated somewhat from month to month in the recent past, as the chart above illustrates. Examining movements over a longer period of time can therefore give a clearer overview of actual developments. In the first eight months of 2025, card use increased 4% YoY, and over the past three months it was up 3.5% relative to the same period in 2024.
Zest for travel goes hand-in-hand with consumption
Icelanders’ card use abroad has been the driver of card turnover in the recent past. Foreign turnover falls into two categories: spending during overseas travel and spending via e-commerce. The Icelandic Centre for Retail Studies publishes data on cross-border e-commerce, and according to the most recent data, turnover with foreign online merchants totalled ISK 2.6bn in July, an increase of 2.2% from the same month in 2024.
In August, foreign turnover with Icelandic payment cards totalled just over ISK 29bn, indicating that overseas travel accounts for a far larger share of turnover than e-commerce does. Icelanders have lived up to their reputation for being travel-happy in the recent past. According to the Icelandic Tourist Board, Icelandic nationals’ trips abroad were up 20% YoY in the first eight months of 2025, and 13% YoY in the month of August. This aligns very well with overseas card turnover, which grew 12% during the month.
Since April, foreign card turnover has exceeded ISK 30bn each month. It first broke the ISK 30bn barrier in June 2024 but appears to have settled in at that level in recent months. In August, for instance, it totalled ISK 32.5bn.
In spite of this buoyant overseas consumption, the payment card turnover balance is still positive. Turnover with foreign payment cards used in Iceland came to ISK 51bn in August, more than offsetting the FX outflows from Icelanders’ overseas consumption.
Private consumption on the rise
Private consumption has been brisk thus far in 2025. In real terms, it grew by 3% YoY in H1, including a 3.1% rise in Q2, the swiftest increase since Q1/2023.
Domestic consumption has picked up overall, partly because of a rise in households’ purchases of service-related consumer goods. New motor vehicle registrations were up as well in Q2, after contracting during the quarters beforehand.
Even though travel and consumption levels are up, households do not appear to be taking on debt to finance their spending. Consumption has correlated well with developments in real wages and population. Households’ financial position is generally strong, and the saving rate is historically high. Even though they are spending more, Icelandic households do not appear to be drawing down their savings to any marked degree. Bearing all this in mind, we think private consumption will continue to rise steadily in the coming term.
