Banks was born Elizabeth Maresal Mitchell in Pittsfield, Massachusetts. As a young child, she was a contestant on the Nickelodeon game show Finders Keepers. She graduated from Pittsfield High School in 1992 and is a magna cum laude graduate of the University of Pennsylvania (1996). In 1998 she completed schooling at the American Conservatory Theater. In 2003, Banks married Max Handelman, who had been her boyfriend since college. She converted to Judaism upon marrying him.