I come from a background where this is a long established belief and have seen firsthand what this belief does. The origins of this belief is mostly an attempt to establish some sort of justice and order in the world. Why are some people born in better situations than other people? Why do good things happen to some people and bad to others?
It was common for people to believe that illness, diseases and other bad things happen because of punishment of sin, however what about a righteous person or a young child who had done nothing? The explanation then became that it was punishment for sin in a previous life. The result was also that good things that happen to people, such as being born beautiful or in a good family or wealthy was also a result of good deeds in a previous life.
Now this is disaterous and actually quite distasteful for most people once they come to terms with what this actually means. To anyone who subscribes to this, they will have to conceed that if their child daughter gets raped brutally, it's because she committed some terrible sins in her past lives. Yup, let them try and deal with that. It's victim blaming in the worst sense. Anything bad that happens to you, any misfortune is really the product of a just universe punishing you (even if you don't remember it).
We actually know many rich and powerful people are horrendous and evil, same with beautiful people or people born in wealthy families. Wealth, never having to suffer illness, being born very attractive etc can actually in reality be a curse, warping your viewpoint on many things. Similarly acting through evil and immoral ways are the best ways in general of securing great wealth, for you and your subsequent families.
This forms of thinking heavily reinforce social classes, and caste in one form or the other. Many people think this is a result of Hinduism only but it is 100% not true - Buddhism while claiming to not care about caste actually still heavily cares about caste because the doctrine of rebirth/reincarnation/karma naturally creates this. The only difference that Buddhism removes compared to Hinduism is while Hinduism bars lower caste people from ever becoming a priest in this life had generally has to work their way up, Buddhism does allow lower caste people to become a monk. The vast majority of all Buddhist people though do not believe that you can acheive liberation in this lifetime itself, and the vast majority just focus on doing good deeds (primarily feeding monks as they view this to be the highest good deed), so that they will get a more favorable rebirth, which will make it easier. Hence if you are from a rich family it means that you have been doing many good deeds in your previous life and you are of good stock and better, and vice versa, if you are poor it is because you have been doing negative sins in your past life.
This is why there was a brutal slave system in Tibet, why for many marriage proposals they care about what caste and family you come from, etc. All the Buddhas came from a high caste and birth. There are no stories about a Buddha being born from a low caste, because it simply doesn't work that way. Same goes for the Avatars of gods in Hinduism, the gurus in Sikhism/Sikhi etc.
In addition, a big issue that reincarnation has is, why is there any real motivation to make big changes or do much in this life?
Copying from a previous comment about Buddhism, but this applies to any philosophy/religion which subscribes to rebirth/reincarnation:
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