Preheat your oven to 350°F (175°C). Grease and flour a 9x13-inch baking pan to prevent sticking.
In a large mixing bowl, combine the yellow cake mix, instant butterscotch pudding mix, eggs, vegetable oil, and whole milk. Using a hand mixer or stand mixer, beat on medium speed until the batter is well blended and smooth, about 2-3 minutes.
Pour the batter into the prepared baking pan, spreading it evenly. Bake in the preheated oven for 30-35 minutes or until a toothpick inserted into the center comes out clean. Allow the cake to cool in the pan for 10 minutes before transferring it to a wire rack to cool completely.
In a large mixing bowl, beat the softened unsalted butter until creamy. Gradually add in the powdered sugar, beating on low speed until combined. Then, add the butterscotch and 3 tablespoons of milk (or cream) and beat on high speed until the frosting is light and fluffy.
Once the cake has completely cooled, use a spatula to spread the butterscotch frosting evenly over the top of the cake. If desired, drizzle additional butterscotch and sprinkle butterscotch chips on top for decoration.
Slice the cake into squares and serve. Enjoy this delightful Butterscotch Cake with a cup of coffee or tea for a perfect afternoon treat!