First, write your text on your canvas with a random font. The font I used was Fontin, which can be found in the resources section.

If you have your text tool selected (Press T), you will see the Character and Paragraphs Panel toggle button appear on your toolbar:

The following panel should appear:

I will explain the options in the panel that you can use to create effective text modifications. Please refer to this image:

1. This one is kind of obvious, it sets the character size.
2. This sets the line height of your text. The larger your font size, the higher the line height has to be. If for example we set our size to 20 and line height 18, the text will appear just fine.

However, if we change our text size back to 36 without changing the line height, the text will become cluttered:

You can create nice text effects with the line height effect without having the hassle of creating tons of text layers. You can add inner strokes that complement eachother for example:

3. Kerning. With this method you can change the kerning between selected characters. In the following image I changed the kerning between every letter next to both of the capital S’s in the bottom text line:

4. You can change the character tracking with this setting. This is my favourite character option, if you toy around with this setting, you can almost make it look like an entirely new font and make the letters connect to eachother like I’ve done in the following image:

The next 4 options in the character panel:

5. Vertically scale your text. Most of the time, this will not really look good on fonts if you change it, because the designer made it in a fixed size. If you find a font where it works however, you can create an original effect. Vertically styled:

6. Horizontally scale your text. Pretty much the same as vertically, looks weird and messy:

7. Setting a characters baseline shift. Changing this will put your text higher or lower:

8. text color, should be pretty obvious, you can change a single characters color if you highlight it, or its entire color if you only select the text layer.

With all these methods combined, you can create good looking text with just a single layer. You won’t have the hassle of selecting individual layers if you want to move all of your text to a different section. The only downside to using just one layer, is that you cannot use different layer styles. Oh well. This is what I came up with after some experimenting (remember, this is just a single text layer):