I am using bash in os X Terminal app, and my custom $PS1 breaks when I scroll through my history.
PS1="${BLUE}\u${CYAN}@${RED}\h${BLUE}\w\n\[${red}\$${NC}\]"
also tried PS1="${BLUE}\u${CYAN}@${RED}\h${BLUE}\w\r\n[${red}\$${NC}]"
The problem seems to be in the newline. I have used this bash prompt on Slackware no prob.