To permanently add a charm: With the Xbox version, just select a piece of equipment with one or more empty charm slots in the inventory and hit A; a menu will come up allowing you to permanently charm the item with any of the charms you have collected in your inventory. In the equipment menu you can hit Y to add charms to equipped items (currently that is the only way to charm a bow). On the PC, right click a piece of equipment with an empty charm slot.
I took me a long time, about level 15 or so, before I figured out how to use charms. Like a total noob, I kept trying to drag and drop them onto items. Then I realized I only needed to right click on the item to bring up a convenient list of charms.
