Melt the butter in a medium saucepan over low heat.
Whisk in the flour to make a smooth paste, cooking for 1 to 2 minutes until lightly golden.
Slowly pour in the milk while whisking constantly to avoid lumps.
Bring the mixture to a gentle simmer until it thickens into a smooth sauce.
Stir in the cheddar cheese until melted and creamy.
Add the softened cream cheese, garlic powder, and paprika, stirring until smooth.
Taste and season with salt and pepper as needed.
Serve warm in a small bowl, alongside soft pretzels or crunchy pretzel bites.