01 - In a medium saucepan over medium-low heat, combine the softened cream cheese and milk. Stir continuously with a whisk or wooden spoon until the mixture is smooth and fully melted together, about 3–4 minutes.
02 - Gradually add the shredded cheddar cheese in handfuls, stirring constantly after each addition until the cheese is completely melted and the mixture is velvety smooth.
03 - Stir in the garlic powder, onion powder, smoked paprika, black pepper, cayenne pepper (if using), and salt. Continue heating gently for 2–3 minutes, stirring frequently to prevent scorching on the bottom of the pan.
04 - Remove from heat and transfer the dip to a warm serving bowl. Garnish with freshly chopped chives or green onions if desired.
05 - Serve warm alongside tortilla chips, breadsticks, pretzels, or fresh-cut vegetables such as celery, carrots, and bell peppers. Reheat gently on the stovetop or in the microwave if the dip thickens upon cooling.