Reset garbled Terminal window on OS X

Your terminal has been shifted into “alternate character set” mode. To shift it back out, type

tput rmacs

at your (garbled) shell prompt. Your typing will appear garbled, too, but it will be back to normal after this command finishes.

I have had this same problem. To fix, click on Shell --> Send Reset. And if that doesn't work. Shell --> Hard Reset. This will reset it without you having to close and reopen the terminal.

Typing "reset" at the command line (even if you cannot see what you are tying) often helps.