Punctuating quotations

In American usage, the comma and period always (still) go inside quotation marks. The British usage of placing punctuation where it actually applies is what they call "logical," and many Americans think so too. But you won"t find any American style guides advocating it. You could say you"re writing for an international audience, and then choosing the British style wouldn"t be so unusual and could certainly be defended. Most of Europe, Canada, and Australia follow it, as do British territories and those areas settled by the British around the world (such as India).

This subject is covered extensively in Fowler"s Modern English Usage and has been the subject of quite a bit of discussion on alt.usage.english. In short, the rule that commas and periods always go within the quotation marks (called traditional style) goes back to the days of movable type, when it was believed the period or comma would be likely to be damaged if it were on the outside of the quotation marks. This traditional style has only lately been questioned because of technical instructional manuals for computer use (where it does matter a great deal whether some quoted matter should be entered exactly as quoted).

For other punctuation than the comma and period, if the punctuation belongs to the quote, put it inside the quotation marks. If not, put it outside. If it belongs to both, put it inside. Example: Did you know that she asked him, "Why?" Traditionally, the question mark within the quotes does double duty and there is rarely a need to double punctuate. Here is what one usage guide, Chambers Guide to Grammar and Usage (1996), says:

When the end of a passage of quoted direct speech coincides with the end of the whole sentence, and there ought logically to be _two_ punctuation marks—one belonging to the quoted words and one belonging to the whole sentence—it is often correct to insert only _one_ punctuation mark and simply take the other for granted. The following rules apply [two examples follow before this one]:
(iii) question/exclamation mark + quotation mark +question/exclamation mark _may be_ reduced. If the two marks are not identical, both should be retained: Why did he shout, ""Look out for that car!"? If the two marks are identical, it would be logical to keep both, and it is not wrong to do so: Why did you say, "Who goes there?"? but it is considered preferable by many people to omit one or the other of the marks, even though it is not strictly logical to do so since each of them is attached to a different part of the sentence: Why did you say, "Who goes there?" Why did you say, "Who goes there"?