paint chip with rust

i have a small paint chip with rust forming on my fender...
how do i go about fixing this?
not big enough to take it in.. about the size of a dime

Dime size is pretty big actually for a touch up. But one thing I found that worked good was...I found this "sanding stick" by 3M at Murrays. you turn the bottom of it and it pushes the sanding stick out. I went over the rust with that, then taped it off, primed and painted it with a couple coats. Then wetsanded and rubbed the area and it looked pretty good. The car was a 1992 Mustang GT. The chip/rust spot was under the spoiler. I saw the kid with the car 2 years later and it still looked pretty damn good for a rattle can job in that tiny area.

If your just looking to keep it from rusting anymore the fiberglass pen like svt32 mentioned works great, Scrub it with that to clean it up and apply some touchup paint and it will slow the rust down and be less noticeable. If you want it gone your going to have to get it painted.