Washington Federal Savings and Loan Association plans to introduce a discount-for-cash program next month in the Washington metropolitan area. Approximately 1,800 merchants have agreed to knock an average of 5 percent off prices for customers who pay in currency, money orders, or travelers or personal checks. The discount then will be deposited in the customer's savings account with Washington Federal.

Among local retailers who have signed up for the program, entitled SaveSystem, are George's TV and Appliances, Budget Rent-a-Car, Athlete's Foot, Market Tire, China Garden restaurant, and Peaches record and tape shop.

Others participating include clothing, hair care, carpet, flower, camera and sewing stores, and auto repair and servicing centers. The discounts range from 5 percent up to 10 percent at different stores.

SaveSystem is a franchise that originated in the St. Louis area in 1977 and has spread to eight states, Florida is the only one in the East. Though discount-for-cash systems have been tried before with little success, the tie-in with established financial institutions is intended to put a stamp of approval on them.

Washington Federal's president, James L. Harris, said his association bought the local franchise for $250,000 and expects to put that much again into an advertising blitz to attract customers.

He hopes to set up 12,000 to 15,000 new accounts right away and eventually to double the 38,000 customers Washington Federal now has. Application blanks can be obtained from merchants displaying a SaveSystem window sticker.

The idea of a deposited rebate -- as opposed to lowering the price at the point of sale -- is supposed to appeal to consumers who like to find tangible evidence of their savings in their monthly statements. Rebates credited monthly earn 5 1/2 percent annually compounded daily. The customer's plastic SaveSystem card cannot be used to make withdrawals from his or her savings account, a safeguard if it is lost or stolen.