This article gives the rules and conventions when it comes to Punctuating Direct Speech, that is the words actually spoken by someone, i.e. direct speech‏‎.

Inverted Commas

Inverted Commas or Quotation Marks are used to enclose whatever someone says. Note that other punctuation comes inside these marks.

“Where are you going?”

“Wow!”

“It’s very cold outside.”

New Paragraphs

Every time a speaker changes, begin a new paragraph.

“Where are you going?” asked Jim as he yawned.
“To the supermarket,” murmured Harriet, even though she knew he wasn’t listening.
“Bring me back some beer,” Jim said into his newspaper.
Harriet glanced at him for a moment but said nothing.

Commas

“I’m dreaming of a white Christmas.”
“I’m dreaming of a white Christmas,” said Bing.

Note the use of the comma here in the second example. What is said makes up a complete sentence, and if it weren’t direct speech it would have a period or full stop at the end – as it does in the first example.

However, because it’s followed by the speaker, we use a comma at the end to show it runs on to the speaker.

Likewise, if we put the speaker, it is these which are followed by a comma before the direct speech.

“I’m dreaming of a white Christmas.”
Bing said, “I’m dreaming of a white Christmas.”

And if the direct speech is interrupted, we use two commas to break it up thus:

{speech + comma} + {verb + speaker + comma} + {speech}

“I’m dreaming,” said Bing, “of a white Christmas.”

However, if there is a definite end to the first speech, it’s followed by a period and then capital letter:

“I’m dreaming of a white Christmas,” said Bing. “Just like the ones I used to know.”