Contests can be great for writers. If your work is shortlisted you know it's of a high standard, and if it's a prize-winner both your bank balance and your reputation are likely to benefit.
Most writing contests are run by people with literary or publishing experience, some are organised by charities, and some are organised by charlatans. The latter will take your entry fee, and it's doubtful that any of the entries are ever read, let alone judged by anyone with any literary credentials, and the prizes are never awarded. Sometimes, the prizes will be awarded, but other entrants will be offered publication and be expected to pay for it. It isn't unknown for work to be published without the author being notified at all.
There are ways to avoid the dodgy competitions. Where did you hear about the contest? Who are the organisers? Check them online. Longstanding contests and those run by large publishers and charities are more likely to be okay. Sites such as Preditors and Editors, on Facebook, and Writer Beware at might be helpful.
If the contest is new or relatively unknown, who are the judges? When the final placings are determined by public vote, who wins can boil down to who knows the most people. Will entrants be notified or will the results be online? Are you giving away any rights to your work by entering? Are winners expected to take part in publicity? How often are the contests held? What is promised in return for your entry fee? If winners only get exposure, they are effectively paying for publication.
How clear are the guidelines, rates, and terms and conditions e.g. do they specify a format? If they are confusing or incomplete it may simply be that those running the contest are amateurs, but it might indicate that the entries are less important than the fees. Email the organisers if there's anything you're unsure about. If you don't get a prompt and satisfactory response, it might be wise to think twice about investing your effort and cash.
Whether a contest is worth entering or not will depend on what you aim is. If you need the spur of a deadline to stop you procrastinating, or want the inspiration of a theme, or the discipline of a set word count, the size of the prize or the prestige of the contest isn't as important, but you still want to be sure it's genuine.
The vast majority of writing competitions are totally honest, and there's nothing quite as inspiring as the thrill of winning. Do your homework and have a go.
Good luck!