Citicorp Financial Inc. will buy Central Charge Service from Riggs National Bank and convert most of the 400,000 Central Charge cards to Citicorp's Choice cards.

A spokesman for Choice said Central Charge customers and merchants will receive a letter soon explaining the effect of the sale, which is expected to become final in early November.

Riggs President Daniel Callahan said the bank expects to take a $3.8 million after-tax loss on the sale of Central Charge. Riggs' profits have suffered this year, mainly because of problem loans made to foreign countries and to local real estate developers.

Last week, Joe L. Allbritton, who bought control of Riggs earlier this year, took over as chief executive, relegating Vincent C. Burke to the ceremonial role of chairman of the bank's board.

Customers who have credit card accounts with both programs will be offered the option of keeping two Choice accounts or combining them, a Choice executive said.

Riggs, under the agreement with Citicorp, will keep most of the accounts that are past due. Riggs said part of the $3.8 million loss involved in the sale will be caused by the bad accounts, while the rest of the expense will come from closing down the operation. Riggs will not grant the accounts it keeps any new credit, but merely try to collect on them.

A spokesman for Citicorp Financial said the purchase will give it between 250,000 and 350,000 new credit card accounts, after eliminating duplication, and 5,000 additional retail outlets in Washington, Maryland and Virginia. Choice already has about 400,000 active accounts, most of them in the Washington and Baltimore areas.

Citicorp Financial is a subsidiary of Citicorp, which owns Citibank, the nation's largest bank. Citicorp Financial purchased the old NAC credit card program in 1976 and renamed it Choice in 1980. Citicorp added several new features to the Choice program, such as giving customers a 1/2 percent rebate on their purchases if they charge $600 or more a year on the Choice card.

Central Charge, founded in 1952 and bought by Riggs in 1967, has been losing money for the past few years. The bank had to pay increasingly higher interest rates to get funds to finance customer purchases, but was restricted by District of Columbia law from passing on those costs to consumers.

Even with the recent sharp decline in rates, Central Charge's prospects for returning to the profitability of the late 1960s and early 1970s were remote. Central Charge could never hope to become big enough while owned by a medium-sized regional bank company to be more than marginally profitable because of the heavy costs of processing accounts and servicing merchants who take the card.

Riggs and Citicorp have been negotiating the sale for more than a year, sources said. Riggs has assets of about $3.6 billion; Citicorp has assets of about $120 billion.

Citibank last year moved its Visa and Mastercharge credit card programs to a subsidiary in North Dakota so it could charge higher rates than were then permitted by New York State.

A Choice representative said Choice will not charge customers rates higher than permitted in the jurisdictions in which they live: 18 percent in Washington and 21 percent in Virginia and Maryland.

He said all Choice accounts will be processed in Towson, Md. Riggs' announcement did not say what will happen to employes of the Central Charge division.