In a mixing bowl, beat together cream cheese and unsalted butter until smooth and creamy, about 2 minutes. Gradually incorporate sharp cheddar cheese, mixing until combined. Then, add all-purpose flour, salt, and optional garlic powder until a soft dough forms.

Cover dough with plastic wrap and refrigerate for at least 30 minutes.

Remove dough from refrigerator, scoop out tablespoons, and roll them into 1-inch balls. Place them 2 inches apart on the prepared baking sheet and press down in each ball to create a small indentation.

Spoon hot pepper jelly into each indentation created in the dough balls.

Bake in preheated oven for 13-15 minutes until edges turn golden brown.

Remove from oven and let cool for about 5 minutes before transferring to a wire rack.