Highlight Photoshop text ? How to add a background color. The key thing is to duplicate the characters that you have by holding down the alt / option key and with that, you can then go to the type menu and convert to shape command for the letters. The letters are now just a standard shape.
Go to the direct selection tool and select the letters you want to use, say a whole line or perhaps a select a single word or letter. Go to the shape pathfinder options at the top of the screen (middle) and use the merge option 'merge shape components' otherwise you will still have multiple shapes and you will end up with multiple guides.
Direct selection tool
Go to the view menu with your letter shapes and for the area you want to add a background color, select the view menu and new guide from shape command and now you should see guide lines surrounding the letters you want to add the background to.
Delete the expand shapes (those letters currently selected) and you will have a rectangular area which can now be filled with the standard rectangle tool (especially if you have the view menu and snap on and snap to guides). Create a rectangle shape (layer option) and add in the color you want for your background color for your letters (red, green etc)
Repeat this for all the other chunks of characters you want to add background color to. Select all these different color backgrounds and perhaps go to the layer menu and smart objects and convert to smart object and then goto the layers panel and drag that below the letters in the art board and then drag the colorful background color shape to below the characters or offset etc depending on what you want. There you have it, background color added to the characters / letters / words. You can also then select both the characters and the colors and also use the object menu and smart object and convert to smart object.
You can have them filled with solid colors but you don't need to. With the rectangle selected, go to the rectangle tool and then top left and set the gradient or pattern and select a preset from the drop down. You can then have a background with a white-black gradient or use an image as a pattern etc
Select a rectangle and apply an effect such as a blur via the filter menu. When you do this with the vector, a message will pop asking if you wish to rasterize or smart object (best option). All kinds of effects can be added to the design, you can also add into the mix a mask via the layer menu and layer mask and reveal and then modify the small thumbnail displayed beside the rectangle in the layer entry.
You can duplicate the characters by holding down the alt / option and and then using the convert to shape command but instead of using the merge feature to combine the entire shape, you can leave them as individual backgrounds so if you use this with ABCD etc then you will end up guides (new guides from shape) for all the letters and can then use four rectangles instead all with different colors. You can then group the letter and the rectangle and have four entries all set to individual smart objects.