I refuse to return my fish so thats not happening.

Yes, it would be bad, your tank is not cycled. Though the bacteria live in the filter, primarily, not free in the water. .50 is panic levels, anything over .25 is of immediate concern. Anything above 0 is bad. What type of test kit do you have? if you're using strips, switch to liquid drop tests. They may be more on the initial purchase, but they're more accurate and reliable, easier to get an accurate read, and even though they cost slightly more the bottles will give you far more tests than a package of strips.

Review the stickies at the top of this forum, particularly these threads:

What's cycling? (If you cycled it like the fish store told you to, it's not cycled):
<a href="http://www.fishforums.net/content/New-to-t...eady-have-fish/" target="_blank">http://www.fishforums.net/content/New-to-t...eady-have-fish/</a>

Fishless cycling:
<a href="http://www.fishforums.net/content/New-to-t...shless-Cycling/" target="_blank">http://www.fishforums.net/content/New-to-t...shless-Cycling/</a>

Cycling in general (covers cycling with fish in the tank):
<a href="http://www.fishforums.net/content/New-to-t...esource-center/" target="_blank">http://www.fishforums.net/content/New-to-t...esource-center/</a>

The beginner resource center and tank maintenance guide are good things, but cycling is your immediate concern.

Now... You need to do an immediate water change, at least 50% of the water. I assume you have some sort of water conditioner that removes chlorine? Make sure to always use it on new water. From there you have two options.

Better option: Return the fish if possible and proceed with fishless cycling, as per the link above. This should take 3-4 weeks of daily water testing and some easy eyedropper work, after which you're ready for fish.

Second option: Continue to do water changes as frequently and as large as necessary to keep ammonia under .25. Eventually nitrite will begin to rise, you'll need that under .25 as well. Once both are reliably 0 without water changes, you're home free - this could take as much as two or three months, will be a great deal of work, and even keeping ammonia and nitrite down, you might lose fish. The ammonia levels will still be stressful for fish, and increase the chances of a disease outbreak. Even something easily managed in a cycled tank is a sure recipe for disaster in a cycling tank.