As a Catholic, my understanding is that I can receive a reward from God for my good actions. My virtue, or my struggle to attain virtue, are meritorious.
But for a theologically thorough understanding, I would also need to add that both my ability to earn a reward and my actual earning of it — my merit — are radically dependent on the salvific presence and performance of Christ in my life. It is by grace that I am saved, not by works; and there is nothing that I have which I have not received. (I am a Catholic, not a Pelagian.)
In a lecture titled Discerning a Vocation to Be a Catholic Intellectual, Fr. Dominic Legge, O.P., gave a simile which made this understanding more concrete for me.
He said that merit is like a kid mowing the lawn and receiving in return a Lamborghini from his dad.
The disproportion between the activity (lawn mowing) and the reward (the pricey Lamborghini) highlights the reality that earning the reward for the work performed is still very much a matter of receiving the reward as a genuine gift.
This understanding fits with the story of the prodigal son, where the father runs out to meet the son who had spurned their relationship and wasted his inheritance.
The prodigal-son story and the mowed-lawn/Lamborghini example point out that the the system of grace is a fatherly system: God’s paternal generosity drives this system. That generosity is embodied in the father running out to meet the prodigal and the father handing over a disproportionately splendid reward.
In such a system, one thing can be both a reward and a gift.