Three Washington area banks have stopped returning canceled checks to customers who agree to the change.

The 28,000 customers who have gone along wth the idea so far now must reconcile their accounts by using their monthly statements, which list the check numbers in sequence, name of person or company that received the check.

At present, there is no penalty for customers who want to continue receiving their checks, but bank officals would not rule out the possiblity of a charge being imposed on them in the future. Customers who let the banks keep their checks can get free copies, with certain restrictions.

For the banks, the new system means saving thousands of dollars each month in postage and handling. However, officials also see the program as a way for banks -- as well as savings and loan associations -- to offset the new expenses of interest-bearing checking accounts, which will be legal after Dec. 31.

The banks now keeping checks are Madison National Bank, Mercantile Safe Deposit & Trust Co. of Baltimore and First National Bank, of Maryland.

"We had two options: raise fees or reduce costs," said Glenn L. Schickler, vice president of Madison National Bank in downtown Washington. sSchickler said his bank, which offers free personal checking, chose to reduce costs by keeping checks rather than imposing a fee for checking accounts.

Madison will keep the paper checks for 90 days in its bank vaults, Schickler said. Microfilm copies of the checks will be kept for seven years. sHe said paper copies of checks can be made from the microfilm.

Mercantile plans to keep the paper checks indefinitely, said Thomas Mariani, senior vice president, because of legal questions. However, he said the bank could decide at a future date to dispose of the checks and retain only the microfilm.

Here are details of the program at the three banks:

Madison keeps canceled checks for those customers who haven't notified the bank that they want to continue receiving their old checks as usual. About 60 percent -- an estimated 20,000 accounts -- have agreed to let the bank keep their checks. A customer who needs a copy of a canceled check can get it within 48 hours, Schickler said. The first copies each year are free; after that, the bank charges $1 for each copy. If a customer is audited by the Internal Revenue Service, Schickler said, the bank will provide free copies of necessary checks.

Mercantile keeps canceled checks automatically for the 8,000 customers who have special, no-minimum balance checking accounts. To get back the canceled checks, a customer would have to switch to another type of checking account. Checkkeeping is available, but not mandatory, for regular checking customers who ask to be part of the program. The bank will copy up to 24 checks a year free for a customer; the fee after that is $2 a copy. The customer can get a copy of a check from the bank within 3 working days.

First National Bank of Maryland keeps canceled checks automatically for customers who sign up for its new special Card Savings account, a combination savings-checking account that allows customers to earn interest on their money until a check is drawn. Customers who want to continue receiving canceled checks must have another type of checking account at the bank. Officials would not say how many people have signed up for CardSavings since it began three weeks ago. A customer can get up to two free copies each month; the fee after that is $2 a copy. Checks needed for IRS audits will be copied free. The banks hopes to provide a check copy within two business days, but that will depend on the business volume when the request is made, a bank representative said.

Banking officials say that the practice of returning canceled checks to customers is limited mostly to this country.

"We are one of the few countries that returns checks," said Joseph Coriaci, a Chicago banker who is chairman of the American Bankers Association task force on bank checkkeeping. "Banks don't return checks in Europe and they don't do it in South America," he said.

Coriaci said American bankers began to return checks to cusumers around the turn of the century because the paper created a storage problem. "Why not give it back to customers?" bankers of that era decided, according to Coriaci.

Now, however, the proliferation of checks and the cost of postage and handling has prompted bankers to change their minds.

Postage for a typical customer's statement and canceled checks costs 41 cents a month, according to Madison's Schickler, The cost drops to 15 cents if the banks mail only the statement. Over a period of one year, that works out to a savings of $62,400 off a bank with 20,000 customers in the check-keeping program.

About 35 banks across the nation have begun keeping checks. But the banks are at least six years behind credit unions, which began experimenting with check-keeping in 1974.

"It has been enormously successful, said Bruce Jolly, a representative of the Credit Union National Association, a trade group. "People really don't care if they get back their checks or not," he said.

Of the 22,000 credit unions in the nation, 2,163 now have share-draft programs, including 26 in the District. Under the arrangement, members don't get their canceled share drafts back, but nearly all of them write their checks on two-ply paper that automatically makes a copy.

Bank customers can get similar check forms from their banks for about $2 a pack more than regular check forms.