Article by Michael Goforth II
Covenant Theology and Dispensationalism are the two major theological frameworks used by Christians in their interpretation of Scripture. While there are certainly other systems, these two continue to remain dominant. Within these frameworks, there are a host of variations, but the central tenets of each keep them distinct. In this post, I will attempt to analyze the strengths of each approach followed by some personal concluding thoughts.
Covenant Theology is a framework that interprets all of Scripture through the lens of two overarching covenants: the covenant of works and the covenant of grace. Some theologians add a third, the covenant of redemption, which explains how God would accomplish the covenant of grace. However, the two mentioned above are the most common.
In summary, the covenant of works is an agreement between God and Adam where God would bless Adam and allow him to live as long as he did not violate the terms and eat from the forbidden tree. As we know from the Genesis record, Adam chose to rebel against God, eat of the fruit, and thus break the covenant. Rather than leaving Adam in his broken condition, God lovingly establishes the covenant of grace whereby He would save mankind from sin through a promised Messiah.
In his book, Basic Bible Interpretation, Roy Zuck explains the three central tenants of this system: “(1) The “church” consists of God’s redeemed people of all ages, not just those in the present age between the Day of Pentecost and the Rapture. (2) The Abrahamic, Davidic, and New Covenants are fulfilled in the present age… (3) The purpose of God’s program is soteriological, that is, for the purpose of bringing people to salvation." 
One of the significant strengths of this system is its awareness of the great continuity of Scripture as a whole. Covenant Theology more effectively explains the Bible as the great unfolding of God’s redemptive drama. It also highlights the unchangeable nature of God and the Christocentric theme of every passage of Scripture.
The Lexham Glossary of Theology offers this helpful definition of dispensationalism, “A theological system that interprets the Bible and history according to specific ages or “dispensations” where different principles governed God’s relationship with people.”  While there are a variety of different variations within this system, the above definition is fairly comprehensive in its scope.
Similar to Covenant Theology, Dispensationalism also has central tenants that make it distinct. According to Zuck, “Dispensational theology includes essentially two concepts: (1) the church is distinct from Israel, and (2) the purpose of God’s program is doxological, that is, to bring glory to Himself.” 
Dispensationalism’s greatest strength is its commitment to a normal, historical, grammatical hermeneutic. Some would argue that Dispensationalists can be too "wooden" in their interpretation at times, but overall they tend to take the plain meaning of a Scriptural text.
WHICH APPROACH IS RIGHT?
Covenant Theology and Dispensationalism both have their strengths and weaknesses. In fact, this has led to interesting mediating views such as Progressive Dispensationalism, New Covenant Theology, and Progressive Covenantalism. So which approach should you choose?
It would take longer than a short blog post like this to answer that question, but I would definitely recommend that you study it out. Two categories in Systematic Theology that are impacted the most by these frameworks are Ecclesiology and Eschatology, but it can also impact parts of your Soteriology. Personally, I do not fit into either camp and land in one of the mediating views mentioned above, but I will leave that to another post.
Wherever you land, it is important to remain consistently literal in your interpretation. You should try to stay committed to the normal, historical, grammatical interpretation of Scripture.
If this is not our approach, clearly stated biblical truths will be in danger of sinking in the ocean of subjectivity.
 Roy B. Zuck, Basic Bible Interpretation: A Practical Guide to Discovering Biblical Truth, ed. Craig Bubeck Sr. (Colorado Springs, CO: David C. Cook, 1991), 239.
 Douglas Mangum, The Lexham Glossary of Theology (Bellingham, WA: Lexham Press, 2014).
 Zuck, Basic Bible Interpretation, 239.